What incremental budgeting?
Incremental Budgeting is a system that uses the previous period’s budget (or actual performance) as a basis for the next period’s budget. Incremental amounts are added to the previous period’s budget for the new budget period. Since this is based on allocations from the previous period and is progressive it could lead to a “spend it or lose it” attitude which is not very cost effective for an organization. It doesn’t take into consideration changing circumstances either. The only real advantage is it is simple and change is gradual.
