What is a notable feature of zero-based budgeting?

Zero-based budgeting is characterized by the requirement that all proposed expenditures must be justified for each new period, rather than relying on previous budgets as a starting point. This approach allows organizations to allocate resources more efficiently by evaluating costs based on current needs and priorities, rather than automatically carrying over prior budget figures. Each department or unit must demonstrate how their spending aligns with the organization's goals and objectives, ensuring that every dollar spent is necessary for delivering value.

The focus on justifying expenditures helps eliminate unnecessary expenses and encourages a more strategic allocation of resources, fostering accountability and enhancing financial management within the organization. This level of scrutiny and justification is what sets zero-based budgeting apart from other budgeting methods that might assume baseline figures based on previous budget cycles or limit analysis to administrative costs only.