With the increasing competitiveness among companies, delivering quality products and/or services at low costs is mandatory for organizations. One of the tools developed to increase efficiency, eliminate waste and excesses, and ensure greater alignment between financial and strategic planning is the Zero-based Budget (OBZ). In the OBZ, all costs and expenses of each department, revenues and investments are estimated not based on the company's historical data, but rather, on a zero basis. In this way, the OBZ seeks to eliminate superfluous expenses within an organization, leaving the budget less bloated, closer to reality and generating savings.
The application of this methodology requires greater commitment from area managers, who must prepare budgets in a strategic manner, thinking about the organization's objectives, requiring time and abandoning their comfort zone.
An essential component for implementing Zero-based budgeting is Matrix Expenditure Management. This tool provides greater clarity and a sense of ownership about the organization's costs. The main concepts to be defined by Matrix Expenditure Management are listed below:
· Packages: Expenses that belong to the same category (example: IT);
· Entities: Expenses incurred by a set of cost centers/business units (example: Production, Marketing, etc.);
· Package owners: Responsible for defining guidelines, as well as seeking to optimize resources, oversee goals, and monitor the budget;
· Entity owner: Responsible for complying with guidelines and defining deviation correction plans.
In conclusion, the Zero-based Budget is ideal for companies that use the historical base to carry out their budgets, in order to identify waste and provide increased efficiency. The practical aspects of implementing the OBZ are variable and must take the particularities of each organization into account. An option frequently adopted by many companies is to create a Zero Base Budget every 2 standard annual budget cycles, but regulatory aspects of each sector, in addition to the current economic scenario, must be taken into account.
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