Financial Tools Help Startups Go Greener

Novated leases can cut the cost of car ownership, and may help some people go greener. Photo: Emilio Labrador, Flickr Creative Commons


By Allen Broseph

Startup companies the world over have been coping with the tough economy by becoming more environmentally friendly.

One financial tool that can help startups and their employees save money — and possibly go greener — is the novated lease or deal, in which a company agrees to pay the payments on an item (a car, say) used by an employee.

Oftentimes, the employee may be paid a slightly reduced salary as a result, but both parties often end up ahead, because the employee’s taxable income is reduced, while the employer can negotiate bulk discounts and more favorable loan terms, plus keep purchases like cars off their balance sheets.

An employee can drive off in a car that ends up costing them less, but they get more choice of models than typical “company car” arrangements.

Forward-thinking employers might use novated leases to encourage employees to get into hybrid or fuel-efficient cars. And since novated leases can decrease the cost of using a car, they might make it easier to spend a bit more upfront for such greener technology.

In turn, saving gas, as with saving electricity and water, can help people keep more money in their pockets (and often requires less maintenance). Companies can tap into this by attaining novated leases at bulk discounts, then pass the savings along to employees.

Novated leases can help companies decrease their tax liabilities. This can also be combined with other tax breaks for going green, such as incentives for purchasing efficient vehicles. Businesses can earn additional credits by installing more efficient heating and cooling systems, geothermal HVAC systems, and better insulation.

All of these can add up to large amounts of money saved, which is especially pertinent to startup companies, because they can increase their profits faster than had they not gone green.

The effect all of these green practices have on the consumer is undeniable. Combined with other intelligent business practices, the startup company is aided by increased brand loyalty. Being eco-friendly is a way of life for many people, and resides at the core of their belief system and how they see themselves.

Appealing to this green nature can help give startups a fighting chance.

Changing Planet