Zero-Based Budgeting
Definition
A budgeting method where every expense must be justified from a zero base each period, rather than carried over and adjusted from last year's budget. It forces scrutiny of all spending but takes more effort.
Related Terms in Financial Analysis
Net Revenue Retention (NRR)
The percentage of recurring revenue retained from existing customers over a period, including expansion and after churn and contraction. An NRR above 100% means the existing base grows even without new customers.
Gross Revenue Retention (GRR)
The percentage of recurring revenue retained from existing customers before counting any expansion, so it cannot exceed 100%. It isolates how much revenue is lost to churn and downgrades.
Annual Contract Value (ACV)
The annualised value of a customer contract, normalising deals of different lengths to a yearly figure. It helps compare and forecast recurring revenue across a customer base.
Total Contract Value (TCV)
The full value of a customer contract over its entire term, including recurring and one-off charges. Unlike ACV it reflects the whole commitment rather than a single year.
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