Strategic Budgeting: Zero-Based and Pre-Seeded Methods

When kicking off the budget season, companies often build their budgets from different starting points depending on their financial situations and organizational goals. Although there are countless ways for organizations to structure their budgets, two methods stand out: zero-based and pre-seeded budgeting.

• Zero-based budgeting is exactly as it sounds: from the ground up, companies review and justify every expense, eventually building up their entire budget from scratch.
• Conversely, pre-seeded budgeting accelerates the process by leveraging existing financial data, whether actual results, forecasts, or a combination of both.

Before exploring when each approach is most appropriate and how to implement them in Cube, let's understand how to create a new scenario for your budget data.

Pre-seeded budgeting

Pre-seeded budgeting uses existing data, such as actuals, forecasts, or both, as a baseline for your budget. This method is ideal for finance teams seeking speed and efficiency in their budgeting process and for teams with relatively stable operations and historical data. However, it is less effective for companies with volatile conditions or unreliable historical data, as it may carry over inaccurate assumptions into future budgets.

Here are the pros of pre-seeded budgeting:

• Efficiency: Using existing data makes the budgeting process faster and easier to implement.
• Data-driven: Historical data or forecasts provide a strong starting point for building realistic budgets.
• Can use Smart Forecasting: Harness the power of AI using Cube’s Smart Forecasting engine to create the first pass of your budget. Learn more about Smart Forecasting.

Some cons to pre-seeded budgeting:

• Potential carryover of errors: If past data contains inaccuracies or outdated assumptions, they can be carried over to the new budget.
• Less opportunity for innovation: Building on past data can limit opportunities to rethink spending, as it may encourage the continuation of old habits.

Pre-seeding your budget in Cube: 4 approaches

When pre-seeding a budget, you'll take an existing data set saved in one or more of your Cube Scenarios and push that data into your new budget. There are a few methods to do this, so feel free to try them out to see which works best for your workflow:

• In Cube: Copy or merge scenarios, or build Smart Forecasts
• In your spreadsheet: Export or fetch data, make adjustments (including changing dates and scenarios), and publish it to the new budget.

Here are some specific strategies for pre-seeding budgets with Cube:

• Smart Forecasting
• Rolling Forecasting
• Pushing forward a current scenario
• Trailing 12-month actuals

Smart Forecasting Method

Harness AI to analyze historical patterns and generate budgets automatically

Cube’s AI-driven Smart Forecast pulls in historical data and trends to automatically create an initial budget. This option is perfect if you want to quickly get a starting point and then adjust as needed.

However, Smart Forecasting is not recommended for organizations with minimal historical data, as it works best with a larger historical span to reference.

Steps to create a Smart Forecast in Cube:

1. From your Scenarios tab in the Cube Web Portal, create a new Smart Forecast. We recommend naming this scenario “Smart Budget”, “Budget Baseline”, or any other name that clearly indicates your use case.
2. Select which accounts you would like to create baseline data for. For example, maybe your team has already built a robust OpEx plan, but you would like to pre-seed your Revenue and other accounts using Cube’s AI.
3. Select the time period you wish to build your budget for. Typically, this is one year, but you can use Smart Forecasting to pre-seed multiple years at a time.
4. Select a historical scenario and time periods on which to base your budget. For the best results, we recommend using at least 2 years of historical data.
5. Let Cube’s AI generate your initial budget. This may take a minute or two, especially if you are using multiple years of data, so watch for an email notification from Cube when this is completed.
6. Fetch your smart budget into your templates and refine as needed.

Learn more about Smart Forecasting.

Rolling forecast

Use your existing rolling forecast as the foundation for your annual budget

This method involves using part of your existing forecast as the basis for your new budget. If your team uses rolling forecasting, you likely already have the first few months of your budget created to use. This is particularly helpful if your company operates on a rolling basis, where budgets are constantly updated based on actuals.

Steps to merge rolling forecast data into a new budget:

1. Create a new budget scenario from the Scenarios tab in the Web Portal.
2. Create a new scenario merge to copy the months that fall into your budget year from your rolling forecast scenario into your new budget. For example, if you currently have actuals through Mar-25, your rolling 12-month forecast would span from Apr-25 to Mar-26. If you are building an annual budget for 2026, you would merge your rolling forecast data from Jan-26 through Mar-26 into your budget scenario.
3. Use the Cube Data Exporter to export the remaining months from your current year’s forecast to your spreadsheet. Continuing the example from step 2, use the Data Exporter to export your forecast scenario from last year, Apr-25 to Dec-25.
4. Publish the exported data to your new budget scenario using a budget template. In the example, you would publish that exported data into the Apr-26 to Dec-26 budget months, by modifying the time periods and scenarios first.
5. Use your budget template to adjust for any updates, such as new initiatives or cost-saving measures.

Use your current forecast or actuals & push forward:

Leverage your most recent forecast as a starting point for next year's budget

This method is most effective if you are using the merge scenarios function to actualize your forecasts throughout the year. Make any necessary updates to your existing forecast and push it forward for the upcoming budget year. 

Steps to pushing forward a current forecast:

1. Create a new budget scenario from the Scenarios dimension in the Web Portal.
2. Use the Data Exporter to export the time periods from your current forecast scenario in Cube. For example, export your forecast scenario from Jan-25 to Dec-25.
3. Adjust the scenario names and time periods within that export. If you want to create a 2026 budget, adjust the scenario in this export to say “Budget” and your time periods to refer to Jan-26 to Dec-26.
4. Publish the updated forecast as the foundation for your new budget.
5. Use your budget template to finalize your budget.

Trailing 12-month actuals:

Base your budget on actual historical performance rather than forecasts for a more realistic baseline

This approach uses the most recent 12 months of actual data as the starting point for your budget. It’s particularly useful when actuals better reflect spending patterns than forecasts, and our built-in spreadsheet shortcuts make it easy to add summaries.

Steps to Use Trailing 12-Month Actuals in Cube:

1. Use the Data Exporter to export the trailing 12 months of actuals from Cube or fetch them using the Spreadsheet add-on. For example, if you currently have actuals through Mar-25, you would export actuals from Mar-24 to Feb-25.
2. Change the dates to the current budget periods. In the example above, modify Mar-24 to Feb-25 to say Mar-25 to Feb-26. Remove or add any remaining months to this budget template as needed (i.e., remove Mar-25 to Dec-25 and add Mar-26 to Dec-26).
3. Publish that adjusted data to Cube to seed the relevant accounts in your new budget.
4. Adjust for any anticipated changes in the upcoming year.

Pre-seeded budgeting gives you the flexibility to build on what you know, providing a fast and effective way to develop a budget grounded in historical trends and current forecasts. We have many templates to support various methods of pre-seeded budgeting–check them out and customize them to fit your needs. Using Cube, you can pull in the necessary data, customize it, and push it back to Cube right from your spreadsheet so you can move forward with confidence.

Zero-based budgeting (ZBB)

Zero-based budgeting builds the budget from scratch every year, requiring justification for every expense. This method is ideal for teams looking to cut costs or who are undergoing large organizational changes, such as entering a new market. While more time-consuming and labor-intensive than the pre-seeded budgeting method, zero-based budgeting can often align more closely with a company’s current needs and strategic objectives.

Here are the pros of zero-based budgeting:

• Cost control: Every expense must be justified, making it easier to eliminate wasteful spending.
• Strategic alignment: ZBB helps align spending with the company’s current objectives, as it encourages teams to focus on what’s essential now, not just what was needed last year.

Some cons to pre-seeded budgeting:

• Time-intensive: Starting from scratch requires detailed planning and can be time-consuming.
• Resource-heavy: It demands a high level of effort from teams to justify each line item.
• Prone to human error: It’s easy to miss items without a previous budget to reference.

Implementing your zero-based budget using Cube:

1. On the Scenarios tab in the Dimensions page in the Cube Web Portal, create a new Scenario named “Zero-based Budget [YEAR]”. Adding a year to the end of this Scenario name is an easy way to organize and later archive your budgets.
2. Set up your Budget templates according to your organizational needs and goals.
3. Make your Budget inputs within your template and publish those inputs to Cube.
   
4. When you have built up your zero-based budget from your template and published the data into Cube, we recommend locking that scenario and creating a working copy by using the Duplicate Scenario feature in Cube. That way, you will always have your original budget as a reference to track changes against.

Whichever budgeting approach you choose—zero-based, pre-seeded, or something else entirely—the key is selecting the method that best aligns with your organization's current financial situation, strategic goals, and operational needs. Pre-seeded budgeting offers efficiency and continuity for stable businesses with reliable historical data, while zero-based budgeting provides greater transparency and cost control for companies undergoing significant changes or seeking to optimize expenses.

By embracing Cube's flexible planning tools and following the set-up steps outlined above, your team can create more accurate, adaptable budgets that support informed decisions and drive business growth. Remember that the most effective budget isn't just a financial exercise—it's a strategic roadmap that translates your company's vision into actionable financial plans.