SOLAR JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Solar subcontractors run out of cash for reasons specific to how the work is built and billed, on jobs that are making money. The three that cost the most in this trade are below, taken from solar contractor research. Most sit at 75 to 90 days from finishing work to holding the money, and 45 days is achievable.
Cash and profit are measured on different clocks. Your profit and loss records revenue when you invoice and costs when you incur them, while the bank account only knows what cleared. Labour goes out weekly and collects 45 to 90 days later, minus retention. That distance is what a growing, profitable solar company funds out of pocket, and it widens as you grow. The specific things that widen it in this trade are what the rest of this page is about.
WHERE IT LEAKS OUT.
Under the policy drama, solar remains construction: module and racking procurement on volatile terms, utility interconnection as a schedule gate nobody controls (the electrical family's transformer waits apply), prevailing-wage and apprenticeship compliance now embedded in the credit itself, and EPC payment terms with retainage. The trade's ordinary cash mechanics deserve their page even while the policy story dominates.
WHAT MOVES MARGIN IN THIS TRADE.
The Countdown Book
Every commercial project now lives on one of two clocks: safe-harbored backlog racing continuity into 2030, or post-deadline work racing the December 31, 2027 in-service cliff. A pipeline that's not mapped against those clocks is a pipeline whose margins are unknown.
The Audit File
Begin-construction evidence, physical-work records, binding contracts, and FEOC content documentation decide whether the 30 percent credit exists. The paperwork isn't compliance overhead; it's the largest single line item on the project.
The Model Reset
The residential credit's death repriced an entire business model overnight. Pivot decisions (commercial, storage, service) are operating-model choices with cash curves attached, and the operators who chose deliberately beat the ones who drifted. (cfos-operating-model-definition) ---
DAYS SALES OUTSTANDING.
Ninety days is weak, 45 is the target, 30 is strong. Nothing else moves cash faster.
| Position | Days | What it means |
|---|---|---|
| Weak | 90 days | Roughly three months of work funded out of your own pocket. |
| Target | 45 days | Achievable on the days you control: submission timing, complete documentation, follow up in week two. |
| Strong | 30 days | Requires discipline every month, and it's the cheapest capital available to you. |
Moving from 90 days to 45 frees roughly annual revenue divided by 365, times 45 days. At $4M that's about $493,000. At $8M it's about $986,000. That money doesn't come from a bank and it costs no interest, which is why we work the cycle before discussing financing anything.
SOLAR BENCHMARKS.
Solar subcontractors at $1M to $5M net 7 percent, against a CFOS target of 10 percent, set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher. Working capital should sit at 13 percent of annual revenue, and the monthly close should finish by day 10 so the numbers can still change a decision.
FREQUENTLY ASKED.
