Cash Flow for Solar EPCs: Subsidy, Advances and Working Capital

A solar EPC can sign eight jobs in a month and still be unable to pay the module supplier on Friday. Profit and cash are different things. Profit is what is left after a job is fully paid for. Cash is what is in the bank on the day a bill falls due.

This guide is about cash flow for a solar EPC that is already running. It is not about start-up money, which our capital guide for a new solar business covers. Here we trace where cash gets stuck in a rooftop or commercial job, show why the PM Surya Ghar subsidy is not your cash, and give you a 13-week table to copy. The Pipe-to-Pocket Forecast then turns a stage change on a lead into a dated rupee amount.

Every example is illustrative, with its assumptions printed beside it. Nothing here promises a result. This is general information, not financial, tax or legal advice, so confirm figures with your CA and banker.

Where cash gets stuck in a rooftop or C&I job

Cash leaves your account at the start of a job and returns at the end, and the gap is widest on the jobs you win fastest. Nine places hold your money along the way.

Rows 7 to 9 are the ones owners forget to forecast. The five-year duty is in section 7(d) of the MNRE guidelines for CFA to residential consumers (read in full on 31 October 2026). It is a cost with no matching bill.

The subsidy is your customer's cash, so your exposure is their balance

Under the MNRE guidelines the central financial assistance (CFA) is released to the consumer's account, or first to the consumer's loan account, and never to the vendor. The consumer redeems the e-token after the DISCOM has inspected, and the CFA follows (section 6(p)).

Official documents give three different starting points for the credit clock. The guidelines count 15 days from DISCOM approval. PIB, 13 March 2025 says the average processing time is around 15 days after the consumer's redemption request. PIB, 1 March 2024 says within 30 days of the consumer submitting bank details after the commissioning report. These are stated targets or averages, not promises, and our subsidy credit time guide walks through the gates. We found no official national figure for inspection and net-meter time in the field, so use your own.

Your exposure is not the subsidy. It is whatever part of the price the customer holds back until the subsidy arrives. The commonest version is, "I will pay the balance when the subsidy comes." On a ₹2,00,000 job, ₹78,000 is 39% of the price. Accept that sentence and you lend that sum to your customer, interest free, for as long as the DISCOM and the portal take.

The fix is a payment term, not a chase call. Make the last instalment fall due on commissioning, and write that the subsidy is the customer's own claim. The wording and instalment splits are in our payment terms for solar customers guide, so we do not repeat them. Where the customer uses a bank loan, the bank's stage rules decide when you are paid. See the PM Surya Ghar loan process.

The Pipe-to-Pocket Forecast: from pipeline stage to cash date

The Pipe-to-Pocket Forecast turns each stage in your sales pipeline into a dated cash event, then adds the events up by week. It needs no new software. It needs stage names that match cash events and a date rule built from your own jobs.

1. 1

   Name stages after cash events

   After signing, use "Work order signed", "Material delivered", "Installed", "DISCOM applied", "Commissioned" and "Balance received". Each move now means money moved or is about to. Our guide to solar sales pipeline stages covers the stages before signing.

2. 2

   Log the date a job enters each stage

   One date per move, in the lead's activity note. Without entry dates you cannot measure how long a stage takes.

3. 3

   Build a lag table from your last ten jobs

   Note the days from each stage to the next cash event. Take the median, not the average, because one stuck file drags an average up.

4. 4

   Set the date rule and total by week

   Expected date = stage entry date + your median lag. Filter the pipeline by stage, list the jobs, and enter their amounts and dates in the 13-week table.

5. 5

   Keep unsigned deals out of the base

   Count cash only from "Work order signed". Earlier deals go in a separate upside list, and any weighting is your own judgement.

For the lag table, use one row per finished job: the date of each stage above, then total days from signed to paid. That last column is your real signed-to-paid time. Add days from signing to your own supplier payment too. Our sales forecasting guide predicts which deals close. This forecast predicts when they pay.

The 13-week cash-flow template

A 13-week cash-flow table lists every rupee you expect to receive and pay in each of the next 13 weeks, and shows your closing cash after each week. Thirteen weeks is one quarter. It is long enough to see a DISCOM wait play out and short enough to forecast honestly. Copy the blank table into a sheet.

Fill it in this order:

1. Opening cash for week 1 is your actual bank balance, not what you hope has cleared.
2. Receipts come from the Pipe-to-Pocket step. Enter customer payments net of any TDS the customer will withhold.
3. Payments start with fixed items (salaries, rent, EMI, GST), then each live job's supplier and site payments.
4. Closing cash is opening plus total in, minus total out. It becomes next week's opening.
5. Low-water line is the floor you refuse to go below. Our rule of thumb is four weeks of salaries and rent. It is a planning habit, not an industry standard.
6. Gap to the line is closing cash minus the line. A negative number is what you must find that week.

A worked 13-week example, and what moves the valley

In this example the lowest cash comes in week 4, long before the DISCOM wait is felt. Advances to suppliers create the valley. The DISCOM wait makes a smaller, later dent. All figures are illustrative.

Assumptions. Six 3 kW home jobs at ₹2,00,000 each including GST, signed in weeks 1, 1, 2, 3, 4 and 6. Customers pay 30%, 40%, 20% and 10% (structure A in our payment terms guide). The 30% arrives in the signing week. Each later instalment arrives a week after its event: delivery, installation and commissioning. Material is ₹1,40,000 a job, half at signing and half at delivery two weeks later. Crew and transport are ₹14,000 a job. The DISCOM wait is four weeks. Salaries and rent are ₹25,000 a week. Net GST of ₹24,000 and EMI of ₹15,000 fall in weeks 4, 8 and 12. Opening cash is ₹3,00,000 and the low-water line ₹1,00,000.

Closing cash falls below the line in weeks 3, 4, 5, 6 and 8. The lowest point is ₹33,000 in week 4, ₹67,000 below the line. By week 13 closing cash is ₹1,14,000, and customers have paid ₹11.8 lakh of the ₹12 lakh contracted. The business is healthy, and it still spends five weeks under its own floor. Now change one thing at a time.

Three lessons follow. The size of your last peg decides what a DISCOM delay costs you. Growth is not free: signing the same jobs sooner left you ₹20,000 richer by week 13 but ₹80,000 poorer at the low point. And the figure for a banker is the deepest gap to your line, not your invoice total.

C&I jobs: where the peak gap sits

A commercial or industrial job has no subsidy to wait for, but it has a bigger gap, because suppliers of large orders often want payment before dispatch. Whether yours do is a matter of your own agreement, so we assume it. Under section 5(d) of the MNRE guidelines no CFA goes to commercial and industrial buyers, so the whole price comes from the customer.

Illustrative job. A rooftop plant sold to a company for ₹40,00,000 before GST, shown without GST so the shape is clear. Assumed costs: ₹28,00,000 to the supplier, paid in full before dispatch, and ₹6,00,000 for crew, cabling and transport. The customer pays 20% on order, 50% on delivery, 20% on commissioning and 10% as retention. The 20% advance is paid with the order. Each later bill is paid 30 days after it is raised, except retention, released 26 weeks after the commissioning payment. Assume the customer deducts 2% TDS on the full amount of every payment, ₹80,000 across the job. The TDS base can differ by invoice, so confirm it with your CA.

The low point is ₹26.16 lakh, about five times the ₹5.20 lakh the job finally leaves you. The ratio belongs to these assumptions, but the shape is common: the supplier's terms and the customer's first receipt set the funding need, not the final profit.

Before you sign, ask three things. Can the supplier take part payment at order and the rest at dispatch? Can the delivery bill be raised on dispatch, not on arrival? Does the advance cover the first supplier payment? Our guide to selling rooftop solar to MSME factories covers the commercial side.

Supplier credit: what to ask for, and the 180-day cliff

Supplier terms are set by each supplier, and we found no official or published standard for what module and inverter distributors offer. Blog posts quote anything from 15 to 60 days and disagree. Get your own supplier's terms in writing and put them in the 13-week table.

Then there is the clock most owners do not know about. If you do not pay a supplier the invoice value plus GST within 180 days of the invoice date, you must reverse the input tax credit you took, with interest. The second proviso to section 16(2) of the CGST Act says so, and Rule 37 sets the mechanics: the reversal is proportionate to the unpaid amount, and you can re-claim once you pay. Both are on the CBIC section 16 page and the Rule 37 page (read 31 October 2026). Supplies where you pay tax under reverse charge are outside the rule.

Working capital options, from each source's own page

A bank cash credit or overdraft limit is one common way to fund the valley, and the CGTMSE credit scheme can help a bank say yes without collateral. Everything below comes from the bank's or ministry's own page, with the date read. Terms differ by bank, so prepare questions, not a comparison.

On SBI's small-limit page, ₹40,00,000 of annual sales through the account gives an assessed ₹8,00,000 (20%). The bank makes the final call. For MUDRA, invoice discounting and more, see our solar business loan options guide.

CGTMSE is the Credit Guarantee Fund Trust for Micro and Small Enterprises, which the Ministry of MSME runs.

Tax in transit: GST credit, e-invoices and TDS

GST you pay to suppliers waits as credit until the rules release it, and TDS your customers withhold waits with the tax department. Both can be planned, and both are easy to forget.

GST credit: when it becomes yours again

Credit reaches your electronic credit ledger only when the section 16(2) conditions are met. The ones that catch EPCs: you hold the tax invoice, the supplier has reported it so it shows on your side, you have received the goods or services, the supplier has paid the tax to the government, and you have filed your return. The CBIC section 16 page lists them. The claim deadline is the 30th of November after the financial year of the invoice, or the annual return, whichever is earlier.

GST paid to a supplier who does not file is cash you cannot set off, so check that your purchases show on the portal.

PIB confirms that the rate on renewable energy equipment fell from 12% to 5% from 22 September 2025 (PIB, 3 Sep 2025). The same FAQ says the cut deepens an existing inverted duty structure and that a refund mechanism is available. Whether your books show a refundable credit is for your CA. The service portion (30%) falls under serial number 38 of Notification 11/2017-Central Tax (Rate): 9% central tax (Notification 27/2018-Central Tax (Rate), in force 1 January 2019) and 18% integrated tax for an inter-State supply, per the CBIC tax portal on 31 October 2026. State tax is set by each State's own notification, which we did not open, so check your State's rate with your CA. Confirm your contract's classification with your CA. See also GST on solar installation service.

E-invoicing: the invoice date is a cash date

Above the e-invoice limit, an invoice issued without an invoice reference number (IRN) from the government portal "shall not be treated as an invoice" (Rule 48(5), CGST Rules). A customer who cannot take credit on your bill has a reason to hold payment, so raise the invoice, with its IRN, on the day of the event it bills. The limits and steps are in our e-invoice guide for solar businesses. Your accounting software issues the invoice. A CRM does not.

TDS: why a bill pays less than its face value

A "designated person", such as a company, firm, trust, society or government body, paying you under a work contract deducts TDS under the Income-tax Act, 2025. A household paying for its own home does not. The section 393 page gives 1% for an individual or HUF contractor and 2% for others, once a payment passes ₹30,000 or ₹1,00,000 in aggregate, deducted at the earlier of credit or payment. The department's TDS rate chart lists the same rates for tax year 2026-27. Our TDS guide for a solar business covers who must deduct and on what base.

In the C&I example, 2% of ₹40,00,000 is ₹80,000, about 13% of the ₹6,00,000 assumed margin, held back until credited against your tax or refunded. Enter receipts net of TDS in the 13-week table.

The Monday cash meeting: what to do when the valley dips

Once a week, take 30 minutes to update stages, update the table, compare closing cash with the line and pick one lever. The owner, the accounts person and the ops lead are enough.

1. 1

   Update stages and dates

   Move every job that changed stage last week and reset its expected dates from your median lags.

2. 2

   Replace forecast with actual

   Overwrite last week with the real bank balance and payments. Note who broke a date.

3. 3

   Roll forward and find the valley

   Add week 14. Find the lowest closing cash in the next 13 weeks and its gap to the line.

4. 4

   Pick the cheapest lever

   Act with a date and an owner, using the table below.

Chase any file that sits at "DISCOM applied" past your median. Our guide to moving stuck solar deals covers the sales side, and the sales-to-installation SOP shows where payment terms sit in the handover packet.

How QuickEstimate fits

Quickest Solar CRM keeps the stage list the Pipe-to-Pocket Forecast runs on, and it does not keep your money. It is not accounting software. It does not hold your bank balance, file GST or TDS, issue invoices or collect payments. Do the cash numbers in a sheet or your accounts package.

What it does for this routine is the pipeline side. You can customise lead stages, so name them after cash events. You can add labels, set follow-up reminders on chase dates, log activities on a lead (also on several leads at once) and filter leads by stage. The dashboard and team report give the owner a team-level view.

• Pipeline Management: rename stages after cash events, filter by stage and read the list into your 13-week table each Monday.
• See it in a demo: set up stage names and chase reminders for your own jobs with the team.

What to do this week

1. Build your lag table. List your last ten finished jobs and fill the signed-to-paid table. Take the median for each stage.
2. Copy the 13-week template and fill week 1 to 13 with real numbers. Use your real bank balance, real supplier terms and net-of-TDS receipts. Mark every week below four weeks of fixed costs.
3. Fix one term before your next signing. Make the last customer instalment fall due on commissioning, and ask your supplier for a split advance.
4. Ask your bank branch and your CA two questions. What working-capital limit your account turnover supports, and how the 180-day and credit-timing rules apply to your purchases.

Frequently asked questions

How long does a solar EPC wait to get paid?

It depends on your payment terms and jobs, and no official industry average is published. The official clocks cover only the subsidy and the DISCOM, at 15 days each. Your real figure is the median of days from signing to final payment across your last ten jobs.

Does the PM Surya Ghar subsidy go to the EPC or the customer?

It goes to the customer. The MNRE guidelines say the consumer redeems the e-token and the CFA is released to the consumer account, or to the loan account first if there is a loan. The vendor is not paid the subsidy. Make the final instalment fall due on commissioning, not on subsidy credit.

How much working capital does a solar EPC need?

There is no single figure. It is the deepest gap below your cash floor in a 13-week table, plus a margin for slips. In our illustrative example it was ₹67,000, or ₹2,07,000 when the supplier wanted full advance.

How do I make a 13-week cash flow forecast for a solar business?

List 13 weekly columns. Enter your actual bank balance, then the receipts and payments you expect from every signed job, plus fixed costs, GST and EMI. Closing cash is opening plus receipts minus payments. Compare it with a floor and update it every Monday.

Can a solar EPC get a working capital loan without collateral?

Possibly, if your firm is a micro or small enterprise and the bank lends under the scheme. The Ministry of MSME says the CGTMSE credit scheme backs lending to micro and small enterprises without collateral or third-party security, up to ₹10 crore from 1 April 2025. An RBI Master Direction of 9 February 2026 bars collateral on loans up to ₹20 lakh to such units. The bank still decides.

Does GST input credit improve my cash flow right away?

Not always. You pay GST with the purchase, but the credit lands only when section 16(2) conditions are met, including that the supplier has reported the invoice. It then lowers GST on your own invoices. If the supplier stays unpaid 180 days after the invoice, the credit must be reversed with interest.

Does TDS reduce the cash I receive from a customer?

Yes, when the customer is a designated person such as a company or firm. Under the Income-tax Act, 2025, contract payments carry 1% for an individual or HUF contractor and 2% for others, above the thresholds. A household paying for its own home does not deduct. You recover it as credit against your tax or a refund, so forecast receipts net of TDS.