Zero-base Budgeting Research Articles

Forecasting financial stability in SMEs: A comprehensive analysis of strategic budgeting and revenue management

Small and medium-sized enterprises (SMEs) are vital contributors to global economies, but they often face unique financial challenges that threaten their long-term stability. This review presents a comprehensive analysis of forecasting financial stability in SMEs, focusing on strategic budgeting and revenue management as key pillars. Strategic budgeting plays a crucial role in aligning financial plans with business goals, managing risks, and adapting to market changes. Techniques such as zero-based budgeting, activity-based budgeting, and rolling budgets offer SMEs flexibility in allocating resources and ensuring optimal cash flow management. Meanwhile, effective revenue management involves the use of pricing strategies, sales channel diversification, and customer segmentation to optimize revenue streams and improve profitability. The interplay between strategic budgeting and revenue management is critical for creating dynamic forecasting models that help SMEs anticipate financial challenges and make informed decisions. By integrating both strategies, SMEs can better manage risks, enhance financial predictability, and achieve long-term sustainability. This review also explores the role of technological tools, such as financial software and predictive analytics, in supporting financial decision-making processes. Tools like customer relationship management (CRM) systems and AI-driven forecasting platforms enable SMEs to optimize revenue potential and refine budgetary practices. The review provides recommendations for SMEs to implement best practices in financial planning, suggesting regular budget reviews and proactive revenue management strategies to respond to market fluctuations. By leveraging strategic budgeting and revenue management, SMEs can enhance their financial resilience and improve their capacity to navigate economic uncertainties. The review concludes with insights into emerging trends in financial forecasting, emphasizing the importance of continuous adaptation to maintain financial stability.

Effect of the Management Accounting on the Financial Performance of Small and Medium Enterprises in Rwanda: A Case of Small and Medium Entreprises in Gasabo District

Management accounting provides an excellent opportunity for companies to compete in the market by offering superior products and services at reasonable prices to customers. The general objective of this study was to study the effects of management accounting practices on the Financial Performance of Small and Medium Enterprises in Gasabo district, Rwanda. This study adopted a correlation study design. The target population for this study was the 171 small and medium enterprises in Gasabo district Stratified random sampling method was applied to come up with the sample size, since the population in different Small and Medium Enterprises was considered heterogeneous, implying that a simple random sample is unrepresentative. The study therefore involved 171 Small and Medium Enterprises in Gasabo district. The study collected primary data from the respondents. The data collected was both quantitative and qualitative. Qualitative data is descriptive and non-numerical, while quantitative data is numerical. The study found that Budgeting was the most widely used management accounting practices, including budgeting for planning, activity-based budgeting, flexible analysis, zero-based budgeting, and budgeting for controlling costs. costing systems were the second most widely used management accounting practice, including separation of variable, incremental, and fixed costs; plant-wide overhead rate; activity-based costing; target costing; and cost of quality. Information for decision making was also used by respondents, including stock control models, customer satisfaction analysis reports, product profitability analysis reports, risk analysis reports, and investment analysis reports. Strategic analysis was also highly used by respondents. The study further concludes that the most important elements of management accounting practices amongst the Small and Medium Enterprises in Gasabo district are; the management accounting function identifies key factors that influence Financial Performance and management accounting practices have increased return on equity (ROE), which is a measure of how profitable a company is for its shareholders. This is because management accounting practices help companies to identify and improve risky areas, which can lead to increased profits. This study recommends the creation and enhancement of awareness among firms of the importance of Information for decision making practices as this is the most highly used management accounting practice amongst the Small and Medium Enterprises in Gasabo district. Keywords: Management Accounting Practices, Costing Systems, Budgeting, Information for Decision Making, Strategic Analysis, Financial Performance, Small And Medium Enterprises

The impact of applying zero-based budgeting in evaluating the financial performance of government institutions

The research examines the concept of Zero-Based Budgeting (ZBB) and its significance as a financial management tool aimed at achieving a precise balance between expenses and revenues. This research aims to study the impact of ZBB on the financial performance evaluation of organizations and highlight the importance of ZBB in various government institutions, showcasing its ability to assess financial performance. To achieve this, a questionnaire form consisting of 20 questions was designed and distributed to the General Manager, (Assistant Manager, Department Heads, and Administrative Unit Heads), specifically targeting experts in the field of budgeting. and the research results were analyzed using statistical methods and regression analysis using the Ordinary Least Squares (OLS) model.The research reached several conclusions, including: ZBB compels organizations to enhance resource efficiency and operate cautiously, encouraging the improvement of internal processes and more efficient resource utilization. ZBB enables organizations to effectively control expenses and revenues, contributing to achieving financial goals accurately and efficiently. The research also provides recommendations, such as urging government institutions in the Kurdistan Region to consider adopting ZBB as a managerial tool and suggesting prioritizing and directing resources towards vital activities and projects that contribute most significantly to achieving financial and strategic objectives.The research reached several conclusions, including: ZBB compels organizations to enhance resource efficiency and operate cautiously, encouraging the improvement of internal processes and more efficient resource utilization. There is a positive and significant effect of ZBB on aforementioned variable by (0.45). The research also provides recommendations, such as urging government institutions in the Kurdistan Region to consider adopting ZBB as a managerial tool and suggesting prioritizing and directing resources towards vital activities and projects that contribute most significantly to achieving financial and strategic objectives.

ZERO-BASED BUDGET IN RESTRICTIVE CONTEXTS: WORK METHODOLOGY APPLYING FUZZY LOGIC FOR SMES

Purpose: The objective of the research is proposed a methodology to prepare a Zero-Based Budget (ZBB) for Small and Medium-sized Enterprises (SMEs) in Ecuador, applying fuzzy logic. Design/methodology/approach: A quantitative approach is assumed to show findings derived from the work carried out in these Ecuadorian business units, belonging to non-essential sectors such as wood, textiles and footwear. Fuzzy logic, the technique of expertise, and Trapezoidal Fuzzy Numbers (TpFN) are used to capture true budget levels. Findings: The results recommend that optimal budget levels can be obtained for SMEs in restrictive and health emergency contexts. Originality/value: As a result of COVID-19 pandemic, markets and demand are contracting causing variations in income and demanding greater rationalization at the level of expenditures. For SMEs is essential prepared income and disbursements estimates. Based on the methodology proposed, predictions are made to achieve the objectives of SMEs. Directors will be able to make more successful decisions for the benefit of their companies, to streamline operations, direct the achievement of objectives, rationalize expenses (costs and expenses), and to project better scenarios in the future before carrying out cost-benefit analysis.

Management Accounting Practices in Cooperatives in Nepal

The present research was carried out on management accounting practices in cooperatives in Narayangarh city with the aim to examine the practices of management accounting in cooperatives. The study is based on mainly primary data which were gathered through direct interviews, questionnaires, and focus group discussions. Only eight cooperatives were chosen as samples for the research study using the judgmental method. The research was analyzed with inferential analysis including simple percentages and chi-square test. The research found out the practice of management accounting like capital budgeting, ratio analysis, activity-based budgeting, and break-even analysis is mostly used in cooperatives. Likewise, segregation of cost, cash flow statement analysis, zero-based budgeting, pricing decisions, and responsibility accounting are the least in practice in Nepalese cooperatives. The cause of non-practicing standard costing is not applicable to service industries like the financial sector. In Nepalese cooperatives, hiring an expert from outside to carry out different managerial activities is almost nil. It is concluded that Nepalese Cooperatives are in the initial state with respect to the application of modern managerial accounting tools and yet they are trying to adopt such tools and techniques more and more to cope with the future expected opportunities and challenges to face due to the globalization effect.

Peningkatan performa manajerial melalui budget planning: Literature review

Organizations can be said to be successful if they have good performance. Empirical studies have proven that the creation of good performance is supported by many factors, one of which is budgeted planning. This study found that other factors affecting managerial performance are budget emphasis, budget participation, organizational commitment, differentiation strategy, organizational culture, leadership style, and many others. Based on the classification and type of budget, the budget is divided into several, namely short-term budget, long-term budget, fixed budget, flexible budget, zero-based budget, rolling budget, activity-based budgeting, incremental budgeting, planning, and programming budgeting systems. This literature review provides a contribution of thought that can be a reference for future researchers who want to conduct research and focus on performance with predictors of budget planning. Through this literature review, they can also get information and consider other constructs outside the budget planning construct.

Development of zero-based budgeting approach for multinational construction contractors

PurposeCost overruns remain a persistent problem in the construction industry. Although various cost management strategies have been implemented, innovative approaches are still required. Therefore, the authors attempted to introduce and test a new cost management strategy for the construction industry.Design/methodology/approachZero-based budgeting (ZBB) is one such method whose effectiveness has been proven in different industries over many years. Therefore, the authors initially developed two different frameworks related to the integration of ZBB into a multinational construction contractor and the application process of ZBB for a construction project in this study. Then, the effectiveness and feasibility of the proposed frameworks are tested via an actual field study in a mega construction project.FindingsThe results show savings of 0.81% of the total project budget and 4.74% of the focused cost items by following the ZBB framework compared to the traditionally estimated project budget. The feedback received from the employees in the construction company shows that ZBB could be efficiently implemented during ongoing construction projects.Research limitations/implicationsThe authors believe that implementing new cost management strategies such as ZBB will open doors to deal with the complex cost overrun issues and improve construction cost performances.Originality/valueThis manuscript is the first actual application of the ZBB cost management approach in the construction industry.

Management of sports budgeting on maintenance of facilities in Kwara State Sports Council, Nigeria

This study examined the Management of Sports Budgeting on Maintenance of Facilities in Kwara State Sports Council. Descriptive research design of survey type was used for this study. The population for the study comprised of all 110 staff in Kwara Sports Council. Multistage sampling techniques were used for this study. Stratified sampling techniques was used to group the departments in the study area. While purposive sampling technique was used to select all 110 respondents. Researcher structured questionnaire was used as instrument for the study.The instrument were validated by 3 lecturers in Department of Human Kinetics Education, University of Ilorin and the reliability level of the instrument was establish through test re-test method using Pearson Product Moment (PPMC). A correlation co-efficient of 0.65 was obtained. The instrument were administered by the researchers and three trained research assistants. The data collected were analysed using inferential statistics of chi-square at 0.05 alpha level. The result revealed that bureaucratic process, zero-based budget and bottom-up budget have significant impact on maintenance of sports facilities. The study recommends that bureaucratic process should not be used during the selection of sports budgeting so as to enhance maintenance of sports facilities. Also sports budgeting should be prepared based on zero budget that would enhance effective management of sports facilities.

Constituents and Obstacles of Zero Based Budgeting in Libyan Municipalities: A Study on Municipalities in East Libya: مقومات ومعوقات تطبيق الأساس الصفري لإعداد الموازنات التقديرية في البلديات في ليبيا: دراسة ميدانية على البلديات الواقعة شرق ليبيا

The purpose of this study is to evaluate the constituents and obstacles of Zero-Based Budgeting (ZBB) in Libyan Municipalities. The study is based on an analytical descriptive approach, and the sample consists of (municipal council members, higher management, heads of departments, and personnel of the department of finance) in municipalities based in East Libya. Data was collected through distributing 60 questionnaires; out of which, 90% (54 questionnaires) were collected back. In order to test the hypotheses, the study employs One Sample T-testand One Way ANOVA test. The results of T-test reveal the existence of an adequate organizational structure and managerial environment at high level. However, sufficient human resources and effective accounting information system are partially available. The results also provide evidence of a number of obstacles of ZBB application. The results of ANOVA analysis suggest that there are no variances in the findings attributed to sample characteristics.

Nexus between Fiscal Discipline and the Budget Process in Africa: Evidence from Nigeria

This paper examined the nexus between fiscal discipline and the budget process in Nigeria over the period from 1990 to 2020. Findings showed that the level of fiscal discipline in Nigeria as measured by two proxies of fiscal deficit gap and public debt gap is more enhanced under zero-based budgeting than under current incremental budgeting system. The study also established that civilian administrations are more prone to fiscal indiscipline relative to military dispensations. The paper also revealed the significant role of net foreign aid receipts in significantly narrowing fiscal deficit and public debt gaps in the short-run and long-run, respectively, as well as noted the significant widening impact of an increasing government size on the public debt gap in the long run. The study recommends, among others, the urgent need for the Nigerian government to restore fiscal discipline in public affairs through a reversion to zero-based budgeting system.

The revival of zero‐based budgeting: drivers and consequences of firm‐level adoptions

AbstractThe paper examines the recent revival of zero‐based budgeting (ZBB) in the US. Using archival data, we show that the renewed interest in ZBB was linked to the activities of a hedge fund, 3G Capital, which introduced the practice in newly acquired firms. Other firms picked up the practice, particularly so in some industries, and justified adoption mainly on the basis of expected cost savings. In addition, we show that these adopting firms were smaller than non‐adopters, suggesting that less complexity favours adoption. We also find some evidence that they were more strongly leveraged than non‐adopters, suggesting a cost discipline effect of debt financing. However, in terms of the consequences of adoption, we do not find evidence for significant cost savings in adopting firms overall, although we find some evidence of significant cost savings among those firms referencing 3G in their SEC filings.

A Study on the Cases of Abrupt Shifting from Conventional Budgeting to Zero Based Budgeting (ZBB) under Covid 19 Pandemic Situation in the Small Scale Packaged Food Industry and Small Scale Natural Resource Industry in India

A Study on the Cases of Abrupt Shifting from Conventional Budgeting to Zero Based Budgeting (ZBB) under Covid 19 Pandemic Situation in the Small Scale Packaged Food Industry and Small Scale Natural Resource Industry in India

Reconsidering Budgeting after the COVID-19 Outbreak

The financial field is experiencing unprecedented changes, as the effects of the COVID-19 outbreak are unraveling. One of the main challenges the managers have to face is the elaboration and implementation of the budgets. During 2020, companies worldwide had to continuously adjust the budgets which were already approved before the pandemic. But, as everyone understood that the world is not facing just a temporary situation, executive leaders had to also reconsider their budgeting process, taking into consideration the uncertainties of the future. It was clear that the traditional way of developing a budget, based on historical information, was no longer relevant and a new process should be implemented. Therefore, the aim of this paper is to put into discussion which would be the best alternative to the traditional budgeting process. Based on the thorough analysis of the reports published by relevant organisms and firms, the authors concluded that the best alternative would be the zero-based budgeting technique. The paper presents the benefits of this method, but also a guideline regarding the implementation of this process.

Zero-Based Regulation

A common way of imposing fiscal discipline in private companies, as well as in some governments, is a practice called zero-based budgeting (ZBB). The idea behind ZBB is simple: require that all expenditures be justified anew each period. There is no assumption that spending set at a particular level in a previous year means the same level of spending or more spending will be authorized the next period. Instead, a zero-base is the relevant baseline from which spending levels are set during the budgeting process. This chapter discusses a counterpart to ZBB in the regulatory sphere, namely zero-based regulation (ZBR). The idea behind ZBR is that regulations must periodically be justified anew, just as spending authorizations are periodically reevaluated under ZBB. A ZBR system will have two central pillars: sunset provisions and regulatory impact analysis requirements. Sunset provisions are automatic expiration dates built into regulations. These trigger reevaluation of rules and ensure the default is that rules go away, i.e., return to zero. Regulatory impact analysis requirements, meanwhile, are a form of economic analysis, which can be used as a means to rank and prioritize regulations according to their effectiveness. Taken together, these reforms have the potential to reduce costs substantially while also improving regulatory efficiency.

Assessing Budgeting and Budgetary Control Effectiveness of Credit Unions in the Upper West Region of Ghana

Despite the significant role played by Budgeting and Budgetary Control in aiding organizational success, many Credit Unions (CUs) within the upper west region of Ghana have neglected this important performance management mechanism. Considering the significant role played by Credit Unions in Ghana in supporting micro and small scale enterprises and agriculture against the backdrop of high mortality rate of Credit Unions in the Upper West Region (where the first Credit Union in Africa was formed) it is important to consider if budgeting and budgetary control functions are being efficiently discharged. The main objective of the study was to identify whether any relationship exist between budgeting and budgetary control on one hand and financial performance on the other hand, of Credit Unions in the upper west region of Ghana. The study used the descriptive and correlational research methods targeting the entire population of eight (8) Credit Unions registered with the Department of Co-operatives and affiliated to Ghana Co-operative Credit Unions Association Limited (CUA). The census survey method was employed due to the small population size and purposive sampling was used to select the study respondents due to the technical nature of the subject and a regression model adopted to determine the association between dependent and independent variables. The study found that financial performance is significantly influenced by the budgeting and budgetary control practices of Credit Unions in the Upper West Region. It was also revealed by the study that the extent of use of good budgeting and budgetary control practices including formal budget planning, use of excel/software, punishments/reward, budget participation, flexibility, zero-base budgeting and budget comprehensiveness was very low among Credit Unions. Those directly responsible for the proper preparing and execution of the budget should be properly trained to equip them with the knowledge and skills to do and better job including the adoption of better budgeting and budgetary control practices to help improve financial performance of Credit Unions. Keywords: Budget, Budgetary Control, Return on Assets, Permanent Income Hypothesis, Effectiveness, Organisational Performance DOI: 10.7176/RJFA/11-12-01 Publication date: June 30th 2020

Zero base budgeting: A revolutionary concept of planning the future activities

Zero base budgeting: A revolutionary concept of planning the future activities

Budgeting for Results.

Budgeting is a mandatory yet misunderstood function in most organizations because of its current focus on estimating revenues and expenses. A budget should be a roadmap specifying in dollars and cents organizational goals and how management performance will be assessed. Like a roadmap, its value is entirely dependent on whether the plan is followed. Improving treatment and controlling costs require implementing budgets that focus managers' attention on the elements of production systems that they control and lead directly to better results. The choice between using an incremental, flexible, zero-base, program, or activity-based budget to chart the desired path of departments and organizations should be made in light of organizational goals and the role of the manager within the organization.

Relevance of Zero-Based Budgeting (ZBB) to Commercial Banks in Asia under Present "Slow Economic Growth" - A Perspective on Cost Governance

To arrest the deteriorating profitability performance of Asian Commercial Banks, the top management has to install such a planning and control systems as could force the executives to identify and analyse what they are going to do in total the "cost" involved in performing the activities, set objectives and goals, make requisite operating decisions and evaluate changing responsibilities and work load as an integral part of the monitoring system. This is done only under "Zero-Base Budgeting" (ZBB), the basic idea underlying this approach is not just to cut expenditure but to make the entire programmes more effective by a more purposive allocation of financial resources to various programmes under slow economic growth scenario(s).

Designing zero-based budgeting for public organizations

Several systems of budgeting have been introduced into practice over the last fifty years. While more popular budgeting systems such as incrementalism and Planning Programming Budgeting Systems (PPBS) have seen continued popularity and resilience as budgeting systems, zero-based budgeting (ZBB) has experienced a resurgence in popularity, as governments and public organizations alike seek to control wasteful spending within their departments. The aim of this article is to provide users with a step-by-step guide to designing zero-based budgeting for public organizations. This article begins by describing the foundations of zero-based budgeting, as well as providing a brief comparative exploration of ZBB alongside other contemporary budgeting systems. To gain a deeper understanding of zero-base budgeting and the potential, as well as the drawbacks that this type of budgeting system holds, this paper examines the actual experience of several organizations that have implemented the zero-based budgeting method. This is accomplished by conducting a critical review of all the research and case studies that have been conducted on this topic. It is the hope of the author that both public sector and non-profit organizations will benefit from the findings of this paper when considering the implementation of their own zero-based budgeting, resulting in better planning and performance evaluation.

Orçamentação nos hotéis do Algarve: Alinhamento com a prática internacional

Budgets are an essential tool for planning and control, performance evaluation, communication, coordination and staff motivation. Despite their importance and wide use in the hotel sector, research into the budgeting practices of hotels located in Portugal is scarce. This study analyses the budgeting practices of hotels in the Algarve. Data collected through a structured questionnaire submitted to financial managers shows that budgets are widely adopted; however, they are mainly produced for the short term. The primary reasons for preparing budgets are performance evaluation, target setting, control and short-term planning. Few hotels use zero-base budgeting and there is also little use of flexible budgeting. Budgets are viewed as one of the main performance indicators. The findings are in line with the conclusions of previous studies.