SOLAR JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Solar subcontractors have no cash left 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 are 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 news, solar is still construction. Module and racking procurement comes on volatile terms. Utility interconnection is a schedule gate nobody controls (the electrical family's transformer waits apply). Prevailing-wage and apprenticeship compliance is now part of the credit itself. EPC payment terms come with retainage. The trade's ordinary cash problems deserve their own page even while the policy story gets the attention.
WHAT MOVES MARGIN IN THIS TRADE.
The Countdown Book
Every commercial project is now on one of two clocks. Safe-harbored backlog has to hold continuity into 2030. Post-deadline work has to meet the December 31, 2027 in-service cliff. If your pipeline isn't mapped against those clocks, you don't know its margins.
The Audit File
Begin-construction evidence, physical-work records, binding contracts and FEOC content documentation decide whether the 30 percent credit exists. That paperwork is the largest single line item on the project.
The Model Reset
The end of the residential credit repriced a whole business model overnight. Commercial, storage or service is an operating-model choice with its own cash curve. The operators who chose on purpose beat the ones who didn't.
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 | You can get here on the days you control. Bill on time, send complete paperwork, and follow up in week two. |
| Strong | 30 days | Takes work every month. It's the cheapest money you can get. |
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 costs no interest and needs no bank. So we fix billing and collections before we talk about financing.
SOLAR BENCHMARKS.
Solar subcontractors at $1M to $5M net 7 percent, against the CFOS net profit target, set at your trade's net profit average at your revenue plus 3.5 points, never below 10 percent, before taxes. The working capital target is 13 percent of annual revenue, and the monthly close should finish by day 10 so the numbers can still change a decision.
FREQUENTLY ASKED.
