Solar Financing: Maintaining A Positive Cash Flow
Solar installations have been gaining great traction over the past decade. As the technology becomes more efficient, more businesses and individuals are converting their buildings and homes to solar power. However, with staggered payment schedules, many solar providers find themselves facing a strain on cash flow. Instead of turning to short-term loans, many installers are using debt-free solar financing solutions.
Sales And Cash Flow
While solar installations are popular, even a period of high sales can create cash flow issues. Most solar installers issue invoices with an aging period of 30 days or longer. This is a standard business procedure. But even if sales are high, solar installers still need capital to purchase supplies and meet payroll for the team working on a given project. If invoices are staggered by 30 days or longer, then solar installers need to draw upon cash reserves or find other sources of financing to meet the demands of customers.
Solar Financing Is A Debt Free Option
Solar financing is a form of invoice factoring, tailored to the needs of the solar industry. Instead of waiting for customers to remit payment, invoices are sent for solar financing services as they are generated. The open invoices are then converted to cash within 24 hours, providing immediate access to revenue and a strong cash flow. Because solar financing is a simple exchange of invoices for cash, there is no debt placed on the books, and solar installers preserve their business credit ratings.
No Need For Collections
Occasionally, a customer’s account will age out of the staggered payment schedule. Most solar installers perform collections at that point, but there is a snag. Collections can take up to 45 days to complete. If an account is sent to collections, that means the payment period has expired, and adding another 45 days on top of that means over two months without seeing revenue, thus tightening cash flow even more. Solar financing eliminates the need for collections by automating accounts receivable with quick turnaround times on invoices.
Lear More About Solar Financing
If you own a solar installation business, and would like to maximize your cash flow while sidestepping the need for loans, contact the experts at Speritas Capital Partners. We will work with your directly to create a solar financing solution tailored to your needs.