A step-by-step guide to zero-based budgeting
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A Budget Owner, also known as a Budget Holder, is a member of an organization who is in charge of the financial decisions within their respective area of responsibility.
This person is responsible for making sure that the budget plan is followed, and ensures that everyone adheres to the rules set forth.
In many organizations, the managers and the operational directors play a big part in framing the annual budget, and therefore, they often end up being the ones who must follow it.
Companies must have an internal Budget Owner who ensures that all financial transactions related to their business operations comply with existing financial laws and budget limits.
In addition to ensuring compliance when conducting the budget process, the Budget Owner must be able to explain the rules and regulations to others in the company, so all employees understand which budgeting process has been followed and assess the economic capacity of each department.
They must also know how to calculate payroll costs accurately and keep track of the company expenses to ensure they respect the spending limit.
Small companies often have just one person who acts as both Budget Owner and Budget Head. The main difference between these roles lies in the fact that the Budget Head is the one framing the budget details and Budget Owner is in charge of the budget management.
However, for large companies, there are many instances where those roles do not coincide. One typical case is when the Budget Head is a department head, while the Budget Holder is a board of directors member. Another example is when the Budget Head works under the CEO and the Budget Holder works under another executive director.
In such cases, the company must hire separate individuals for these roles and ensure they can work together harmoniously to work towards the same goal.