Managing project risk and working capital as a local installer: Highlights from webinar

About 20 minutes into our third Strong Tail Solar Alliance webinar, Managing Project Risk and Working Capital as a Small Installer, Dema Headley told a story that a lot of installers have probably heard some version of this year. A homeowner in South Florida signed a project worth over $120,000. The lender funded half of it up front, about $60,000. Then the installer went out of business. No materials had been ordered, and the homeowner was left holding the bag.

Patrick Altier, who was on the panel with her, stepped in to finish the job. He was blunt about how it happens: "We get a big deposit and we go out and we buy that new bass boat we've been looking at." That deposit is supposed to buy the materials. The installer's piece comes at the end.

We've watched some well-known installers close their doors this year, and a lot of them were good companies doing good work. Most of the time it wasn't because they stopped selling. They ran out of cash. So for the last webinar of our fall series, we skipped the vendor panel and brought on two people who run solar companies every day, plus the banker who sees the other side of the line of credit request.

Moderator: Scott Nguyen, OneEthos and Bodhi

Panelists:

• Patrick Altier, Owner, Solar Trek, Inc.
• Kam Hau, CEO, TGE Solutions
• Dema Headley, SVP Digital Banking, Climate First Bank

We opened with a poll: be honest, who's your real bank? Most of the audience said an actual bank, which is what Dema was hoping to hear. A few people admitted their real bank is their next customer's deposit, and fewer picked their Amex than we expected. That set up the whole conversation.

What we covered

• Six months in the bank. Solar Trek has been in business for 45 years, and Patrick says his wife keeps six months of reserves in the bank at all times. He also writes a business plan every year, so mid-year changes are small adjustments instead of hard turns.
• Small misses get expensive on commercial. Patrick's example: miss a 200,000-watt commercial bid by 20 cents a watt and that's $40,000. Your fixed overhead (mortgage, insurance, payroll) doesn't care whether you do one job or 100.
• Nine months and counting. Kam's longest wait to get paid is still going: a large commercial job TGE finished early this year, with a developer handling the funds. His advice is to do your own due diligence on whoever holds the money, even when someone you trust made the introduction.
• The 70/30 funding schedule is live. Dema explained Climate First Bank's new structure for residential loans: 70% at install complete (glass on roof, after a lender inspection CFB does in-house) and the final 30% at passed inspection, instead of most installers waiting for 100% at the end. It starts with a new installer agreement and applies to projects signed after that. Direct pay to distributors is in the works, hopefully in Q1.
• A good site survey catches 95% or more. That's Kam's number. For the rest, both owners lean on their contracts. Patrick's treats things like wood rot behind a wall as an unforeseen circumstance, and he now builds landscaping into the price.
• What lenders watch for. Dema looks at whether projects finish within 90 days of NTP, patterns of customer complaints and Google reviews that don't get resolved, and repeat failed inspections. Nobody in our second poll said they find out a job is losing money from a one-star review, but Dema said reviews are one of the first places a lender looks.
• Orphaned systems are real money. Our third poll asked if you'd take a job from a stranger whose installer went out of business, and "yes, every time" came out on top. Patrick charges a different rate for these and has customers sign an agreement up front. Kam says TGE now says yes 100% of the time, and resolves about 90% of service issues in one or two visits.
• The first date leads to a second. A $300 service call doesn't pay the bills, Kam said, but it turns into Google reviews, removals and reinstalls, roofs, expansions and batteries. Both owners said a battery is the best second sale to a solar customer.

Watch the full webinar here

The full recording also covers our rapid-fire question about a prepaid lease provider that stopped paying out, Patrick's story about a 28-meter horse property, how each panelist handles deposits and inventory on the P&L, and how Patrick uses solar pool heating and generators to level out the peaks and valleys.

Join the Strong Tail Solar Alliance

Every dollar you save on equipment, software and marketing is a dollar that stays in your bank account, and that's the whole point of the Alliance. Members get special pricing through Krannich on JA Solar 440s, FranklinWH batteries, K2 racking and a top-tier inverter (about 15 cents a watt in savings), up to 10% off JA modules through Greentech and BayWa r.e., 20% off Scanifly plus your first drone free, 20% off Damaris Solutions' marketing services, and Bodhi's customer experience software at no cost.

It's free to join for installers approved with OneEthos, which is also how you get on the 70/30 funding schedule. Fill out the form below and the right folks will reach out to you.