Budgeting & Forecasting › The Budgeting Process

What is bottom-up (participative) budgeting?

Beginner

Answer

Bottom-up or participative budgeting involves the managers responsible for meeting the budget in preparing it. It improves realism, ownership, and motivation and uses operational knowledge, but takes longer and risks budgetary slack (padding) as managers build in easy targets.
Real-world example Department heads prepare their own budgets, which are then reviewed and consolidated by finance.

Common follow-ups: What is budgetary slack? | What are the benefits of participation?