Define "cross-functional budgeting."

Cross-functional budgeting involves collaboration across various departments to develop a comprehensive budget that aligns with the overall goals and strategies of the organization. This process encourages input and cooperation from different functional areas, ensuring that the budget reflects the needs and priorities of the entire organization rather than being siloed within individual departments.

By engaging multiple perspectives and expertise, cross-functional budgeting contributes to a more holistic understanding of the financial resources required to achieve organizational objectives. It fosters communication and integration between departments, allowing for better allocation of resources and enhancing the ability to respond to changing conditions and priorities.

This collaborative approach is particularly effective in complex organizations where interdependencies between departments can significantly impact budget outcomes. It contrasts with budgeting methods that focus on individual departmental needs or priorities, which may lead to misalignment with the overall strategic direction of the organization.