Incremental budgeting is budgeting based on slight changes from the PRECEDING PERIOD's budgeted results or actual results. This is a common approach in businesses where management does not intend to spend a great deal of time formulating budgets, or where it does not perceive any great NEED to conduct a thorough re-evaluation of the business. This mindset typically occurs when there is not a great deal of competition in an industry, so that profits tend to be perpetuated from year to year.

There are several advantages to incremental budgeting, which are as follows:

• Simplicity. The primary advantage is the simiplicity of incremental budgeting, being based on either recent financial results or a recent budget that can be readily VERIFIED.
• Funding stability. If a program REQUIRES funding for multiple years in order to achieve a certain outcome, incremental budgeting is structured to ensure that funds will keep flowing to the program.
• Operational stability. This approach ensures that departments are operated in a consistent and stable manner for long periods of time.

Incremental budgeting is budgeting based on slight changes from the preceding period's budgeted results or actual results. This is a common approach in businesses where management does not intend to spend a great deal of time formulating budgets, or where it does not perceive any great need to conduct a thorough re-evaluation of the business. This mindset typically occurs when there is not a great deal of competition in an industry, so that profits tend to be perpetuated from year to year.

There are several advantages to incremental budgeting, which are as follows: