Solar installer cash flow: why profitable firms still run out of money

Margin is what you earn on a job. Cash is what pays the crews on Friday. They are not the same number, and the gap between them is why solar installers with healthy margins still hit months where the bank balance goes red.

We covered where the margin goes in Solar installer economics. This post is about the other half of the money maths: when the cash actually moves, and how much of your own capital a "profitable" job quietly borrows along the way.

The same job, seen as cash

Take the job from the economics post: a 4.4kWp array with a 5kWh battery, sold at £9,500, costing £7,600 all-in, leaving £1,900 of margin. (Domestic solar and battery installations are zero-rated for VAT in Great Britain until 31 March 2027, so there is no VAT in these numbers. From 1 April 2027 the reduced 5% rate returns - worth knowing for jobs you're quoting now that will install late next year.)

Here's how that job moves through your bank account when you take a 15% deposit and nothing else until the end:

Week	What happens	Cash out	Cash in	Running position
0	Customer accepts, pays 15% deposit		£1,425	+£1,425
3	Kit ordered and paid (panels, inverter, battery, mounting)	£3,700		-£2,275
5	Install week: scaffolding £550, labour £1,200, commissioning £350, travel £150	£2,250		-£4,525
6	Handover pack complete, final invoice sent on 14-day terms			-£4,525
8	Final payment clears		£8,075	+£3,550

Two things jump out. First, the trough: by install week you are £4,525 into your own pocket, and you stay there for roughly three weeks. Second, the end position is +£3,550, not the £1,900 margin - because this table only tracks external cash. The remaining £1,650 is the survey, quoting, MCS and DNO paperwork, handover admin and sales overhead you've already paid for as staff time. That's the bridge between the cash view and the margin view, and both are real.

One more risk sits at the top of the table: the 14-day cooling-off period under the Consumer Contracts Regulations 2013. A signed contract can still be cancelled in that window, which is one more reason the deposit-then-order sequence matters. Order kit before the deposit lands and you're carrying cancellation risk on top of the cash gap.

What the rules actually let you collect

The part most installers miss is that the trough is optional. The RECC Consumer Code - which MCS-certified firms selling to domestic customers work under - does cap what you can take up front, but the caps are far above what most firms actually invoice:

• A deposit taken at contract signing should be a reasonable percentage of the contract value, and must not exceed 25%.
• A further advance payment can be requested no more than 3 weeks before the agreed delivery date of the goods.
• Deposit and advance payment together must not exceed 60% of the estimated contract value.
• Any deposit and advance payment you hold must be insured, so that if you became insolvent before the contract completed, the customer's installation would be finished by another Code Member at no extra cost to them. Collecting more up front is only compliant if that cover is in place.

So on the £9,500 job, the code permits up to £2,375 at signing and up to £5,700 collected in total before the kit arrives. A 15% deposit with no advance payment - which is how a lot of firms run - uses barely a quarter of that headroom.

Here's the same job with a 15% deposit plus an advance payment to the 60% cap, invoiced three weeks before delivery, exactly as the code allows:

Week	What happens	Cash out	Cash in	Running position
0	Customer accepts, pays 15% deposit		£1,425	+£1,425
3	Advance payment collected (to 60% total); kit ordered and paid	£3,700	£4,275	+£2,000
5	Install week: scaffolding, labour, commissioning, travel	£2,250		-£250
6	Handover pack complete, final invoice for the remaining 40%			-£250
8	Final payment clears		£3,800	+£3,550

Same price. Same margin. Same end position. The trough falls from £4,525 to £250. The customer pays exactly what they always paid - the only thing that changed is that the payment schedule now tracks your costs instead of trailing them.

Multiply by your monthly volume

One job fronting £4,525 is survivable. Twenty a month is a different business. If each job spends about a month between paying for kit and banking the final payment, you're carrying that trough on every job in flight:

	Deposit only (15%)	Deposit + advance (60%)
Cash fronted per job at the trough	£4,525	£250
Working capital tied up at 20 installs/month	~£90,500	~£5,000

That £90,500 has to come from somewhere: retained profit, an overdraft, or slowing down. And this is the growth trap in the numbers - go from 15 to 30 installs a month with a deposit-only structure and the working capital requirement doubles too, at exactly the moment you're also hiring crews and stocking up. Plenty of solar firms have folded while profitable because growth outran cash. The margin was fine; the timing killed them.

The final invoice deserves attention too. It only goes out when the handover is done, and customers pay faster when everything they're waiting for - certificates, commissioning evidence, the handover pack - arrives together and the invoice lands the same day. Every day between commissioning and invoicing is a day added to the trough, on every job, forever.

Making the schedule run itself

None of this maths is hard. What's hard is doing it reliably on every job when the schedule lives in a spreadsheet and invoices go out when someone remembers. This is what Payaca automates:

• Payment schedules on the project break the contract value into stages - deposit, advance, completion - and Payaca validates that the stages add up correctly before the proposal goes out.
• The deposit invoice sends itself. When a customer accepts a proposal with a deposit configured, Payaca creates and sends the deposit invoice automatically at the moment of acceptance. No automation to build, nothing to remember - the clock on your cash position starts the second they sign.
• Pipeline guards stop work running ahead of money. A stage can require the deposit invoice to be fully paid before the project advances, so kit doesn't get ordered on a job that hasn't paid its deposit.
• Payment-triggered automations fire when an invoice is actually paid - not when a project moves stage - so confirmations, booking emails and internal tasks follow the money, not the diary.
• You can see the position. Billed, paid and overdue across every live project, in one place, instead of reconstructing it from bank statements at month end.

If you're scaling install volume and the bank balance feels tighter every month even though the margins hold, the fix is usually in the payment structure, not the pricing. Book a demo and we'll walk through what your quote-to-cash timeline could look like.