‘Green cash flow’ is a term given to any environmental initiative that can help to boost your business cash flow. With consumers becoming increasingly environmentally conscious, ‘going green’ can be both a strategic business move as well as an environmental one.
There are two major ways companies can improve cash flow:
- Increase your cash inflows (in other words, the amount of cash flowing into your business from the sales of your products and services).
- Decrease your cash outflows (in other words, the amount of cash flowing out of your business from expenses and paying off debt).
We’ll now look at how focusing on the environment can positively affect both your cash inflows and cash outflows in turn.
Increasing cash inflow
Companies that can demonstrate their eco-friendly credentials can use them as a marketing tool to increase sales. 90% of Australian consumers in a recent survey indicated that they would be more likely to purchase ethically and sustainably produced products over those that are not. In addition, 2 out of 4 participants in the survey indicated they would be prepared to pay more for ethical and sustainable products.
This means that environment-conscious businesses can develop a sustainable competitive advantage over their less-environmentally friendly counterparts.
Get paid faster
Businesses can also use green initiatives to get paid faster. For example, by embracing e-invoicing rather than paper invoicing. E-invoices can be sent immediately, and your customers can therefore pay you faster than if you send paper invoices.
Access government incentives
A variety of federal and state government financial incentives are available to encourage businesses to adopt green initiatives.
These incentives can boost cash inflow and help to subsidise the upfront cost of embracing environmentally friendly technology. For example, the Small-scale Renewable Energy Scheme provides a financial incentive for small businesses to use small-scale renewable energy systems such as wind turbines and solar panels.
Decreasing cash outflow
Going green can help to save your organisation money. Examples of green solutions that can decrease your cash outflows include:
Lower energy costs
Use renewable energy sources such as solar power and purchase energy-efficient technology to use in your organisation to lower your energy bills. This also helps to lower levels of pollution.
Implementing a recycling program, such as using recyclable printer cartridges and all eligible office waste such as paper, cardboard and glass, may help save money. Purchasing recycled materials are often cheaper and help with environmental sustainability. =
Eliminating or reducing any unnecessary waste. For example, reducing the amount of wasted stock, especially for perishable items such as food waste. Try to use natural or sustainable resources while doing your best to avoid plastic consumption.
Any other initiative to reduce the expense of an organisations carbon footprint, such as using modern communications technology rather than requiring staff to travel interstate or internationally for meetings.
Becoming greener is increasingly becoming a requirement rather than an option for contemporary businesses to compete effectively in the global marketplace. The financial incentives are becoming as important as the environmental considerations. With the downward trend in the cost of green energy showing no signs of abating, more and more businesses are expected to become eco friendly in the future. By being mindful of environmental protection and sustainability, you have the opportunity to spread awareness about the importance of looking after our world, while boosting your business’s reputation and cash flow.