Cash Flow Management – How can CED Greentech help me?
Due to consequential and meaningful changes to the solar landscape, installers and solar companies are forced to quickly adapt and pivot. Examples of these changes can be universal or market-specific, they go as follows: various incentive programs such as SRECs, rebates, net-metering, fintech provider rules and regulations, the federal investment tax credit (ITC), authority housing jurisdiction, local (AHJ) permitting requirements, even supply-chain disruptions, just to name a few. These dynamics necessitate a certain adaptability, but that very adaptability also impacts predictability, which oftentimes impacts profits and cash flow.
For most growing companies (yes, that includes solar contractors) profit is one thing, however, cash flow is the only thing. When do you get paid? How do your receivables correlate with your payables and your future commitments? And how does your overall stewardship of this responsibility translate to the company’s ability to grow and thrive?
For residential installers, there must be a balance of installation capacity and speed of install versus the number of jobs you’re able to sell. For example, we’ve seen some installers pay commissions to their sales team or a third-party sales organization before installation takes place. This may be feasible depending on the predicted cash flow, but could also result in an unwanted outcome if the installation backlog and cycle times don’t support the desired timeline... Additionally, some installers push for growth and invest money that should be going towards payables back into their company instead. Whether it’s by adding additional sales organizations, marketing and vehicle purchases, etc., this flawed growth strategy leads to an inability for the installer to pay their bills.
For commercial installers, the balance comes down to the pay structure of the contract versus the capital intensity needed to complete the project (while potentially working on others). Whether the contract is structured through monthly draws or milestone achievements, there can be a significant bridge of cash where you’re funding a large portion of the project before you’re paid. If you have the cash on hand, you may be OK. If you do not, you’re either borrowing money and paying interest which can eat at your profitability, or you're out of cash entirely and cannot pay your liabilities and fund the project simultaneously. We’ve all heard these horror stories.
The key to cash flow management is balance. One way that CED Greentech supports its customers is by providing financial solutions that can help installers better manage their cash flow needs. One set of such solutions exists through CED's Greentech Financing Solutions team, which offers installers a handful of options for residential projects via the Ensemble Program, or the National Direct Pay Program, and also an additional suite of solutions for commercial solar projects. While each of the Programs has nuances, they all address cash flow and credit availability head-on, as the number one issue.
These solutions can help installers with one or more of the following benefits:
- Provide financing to homeowners and businesses
- Potentially reduce dealer fees
- Increase payment structure
- Decrease liabilities
Through the Ensemble program, we’re able to help you with your cash-flow management and support you in managing this complex process. The purpose of CED Greentech finance programs is to help solar installers to bring more predictability to their business, which can help not only profitability but can also help ease the task of cash flow management.
Through Ensemble, we’re able to help our partners solve a piece of the puzzle that has strengthened their financial viability. If you’d like to learn more to see if any of CED Greentech’s Financing Solutions programs is a good fit for you, please reach out to your local salesperson. They can connect you with your area’s finance specialist today!