Advantages of Zero Based Budgets

Advantages of Zero Based Budgets

Advantages of Zero based budgets include realistic estimate, accurate allocation of resources, and effective utilization of resources, improved communication between approving and preparation authorities, and improved understanding of budget.

1.    Realistic Estimates

First advantage of zero based budgets is realistic estimate for its peroration. It is based on realistic and updated information or estimates.

2.    Accurate Allocation of Resources

Second advantage of zero based budgets is accurate allocation of resources. Zero based budgets are based on more depth analyses of activities and therefore resources are accurately allocated to different activities.

3.    Effective Utilization of Resources

Third advantage of zero based budgets is effective utilization of resources. In zero based budgets resources are allocated accurately and this accurate allocation ensures effective utilization of resources.

4.    Improved Communication

Fourth advantage of zero based budgets is improved communication between planner and implementer of budgets. Zero based budgets requires a lot of discussion and communication for allocation of resources, therefore it eliminates the communication gap between budget approving and budget implementation authorities.

5.    Improve understanding

Zero based budget require detail justification for allocation of resource, therefore it require a details work and deep analyses. The details working improve the understanding of the managers responsible for budget preparation & implementation.