What is a key advantage of bottom-up budgeting?

A key advantage of bottom-up budgeting is that it leverages better local knowledge. In this approach, budget proposals are created by lower-level managers who have direct experience with the day-to-day operations and understand their specific departments' needs and challenges. This grassroots input often leads to more accurate and realistic budgets, reflecting actual conditions and requirements.

Since lower-level managers are closer to the operational activities, they can provide insights and details that might be overlooked by higher management, resulting in budgets that are more aligned with the realities of the business. This improvement in budget accuracy can enhance organizational efficiency and resource allocation. Additionally, involving employees in the budgeting process can increase their buy-in and motivation as they feel their expertise and contributions are valued, leading to a more engaged and effective workforce.