Payment Terms for Solar Customers: Advance, Milestones, Balance

A 3 kW system in Nashik is commissioned on Thursday. On Friday the rep asks for the last instalment of ₹20,000. The customer says, "Subsidy aaye tab dunga." (Illustrative.) Nobody lied and nobody was careless. The work order said "balance on completion", and the customer read "completion" as the day the government's money reaches his account.

Payment terms on a solar job go wrong in three places. The subsidy is paid to the customer, never to you. A bank loan pays you in stages that the bank decides, not your quote. And once a payment is due, nobody owns the chase. Each one is fixable on paper before the first advance is taken.

This guide gives you the schedules, the clause wording and the chase routine. Scheme rules come from the MNRE guidelines and bank rules from the banks' own pages, all opened on 31 October 2026. Rupee examples marked "illustrative" use stated assumptions you can replace. This is a working guide, not legal advice.

What the scheme says about payment terms, and what it leaves to you

MNRE sets no payment percentages for a PM Surya Ghar job. It lets the customer and the vendor agree the price and the schedule, offers a sample agreement, and keeps itself out of any dispute. The table below lists each rule we found in the guidelines, with what it means for the terms you write.

Source: MNRE, Guidelines for PM-Surya Ghar: Muft Bijli Yojana, CFA to Residential Consumers. The file on MNRE's CDN has a July 2025 upload path. Read in full on 31 October 2026.

MNRE can amend the guidelines (section 16), so check the National Portal for a newer version before you print your agreement. We cite the copy on MNRE's document store. See also the CFA scheme entry.

For the subsidy amount in our examples we use the guidelines' own formula. CFA is 60% of the benchmark cost for the first 2 kW and 40% for the third kW, and the benchmark is ₹50,000 per kW for the first 2 kW and ₹45,000 for the additional kW (sections 5e and 5g). On 3 kW that is 0.6 × ₹1,00,000 + 0.4 × ₹45,000 = ₹60,000 + ₹18,000 = ₹78,000.

The Proof-Peg Schedule: one event, one proof, one owner, one chase date

A payment term fails when it is a date ("after 15 days") or a mood ("on completion"). The Proof-Peg Schedule replaces both with something the customer can check. Every instalment is a peg, and every peg is filled in on four lines before the work order is signed.

1. 1

   Name the event

   One observable thing that happened or did not: material delivered at site, installation finished, DISCOM commissioning done. "Mid-way" is not an event.

2. 2

   Name the proof

   The document that shows it: a challan signed by the customer, a photo set, a completion note, the DISCOM record. The customer sees the same proof you do.

3. 3

   Name the owner

   Who gets the proof, who raises the invoice, who makes the first call. Usually three people: site supervisor, accounts, the rep.

4. 4

   Set the chase date

   The day after the invoice goes out, a call is due. A promised date becomes the next reminder. The routine is below.

Three rules keep the schedule honest. The customer can verify the proof, or you have recreated the "completion" argument. One event, one peg, so never bundle delivery and installation unless they happen on one day. The last peg is commissioning, not subsidy, because the subsidy is the customer's refund from the government.

Fill in this peg card for every job. It goes into the handover packet described in our sales-to-installation SOP, where payment terms are slot 4.

Rename and re-count the pegs to fit your job. The four fields stay the same.

Residential milestone structure with no bank loan

For a self-funded home job, four pegs work well: advance at signing, delivery, installation finished, commissioning. The percentages below are our suggestions, not an industry standard. We found no official figure to quote.

Illustrative job. 3 kW, grid-connected, home customer, ₹2,00,000 including GST (assumed). CFA on 3 kW is ₹78,000 by the formula above.

Illustrative: ₹2,00,000 incl. GST, amounts rounded. These splits are our suggestion, not an MNRE or industry rule.

The subsidy-wait trap, and the line that stops it

The clause that stops this is the one most agreements lack. Some customers hold the final instalment because they think the subsidy pays you, or because they want the subsidy in hand first. Explain it at signing, with the guidelines open: the CFA goes to the customer, it is processed within 15 days of DISCOM approval, and your last peg is commissioning. Our subsidy credit timeline guide covers realistic delays, so you can say honestly that the gap can be longer than 15 days. Clause 3 in section 7 puts this in writing.

How big should the advance be?

A larger advance protects you and shrinks your pool of customers. A smaller one does the reverse, so weigh both sides.

Residential jobs with a bank loan: whose money pays which peg

With a PM Surya Ghar loan, the bank pays most of the price, on its own timetable. The customer's own cash is mostly the margin. The three bank pages below differ on exactly the point that matters to you: when the money reaches the vendor.

Banks change terms, so check on the day you quote. Other banks are covered in our loan and EMI comparison and the concessional loan process.

Take the same illustrative job, ₹2,00,000 for 3 kW, with a ₹1,80,000 loan and a ₹20,000 margin. Under a 70/30 rule such as IOB's, you receive ₹1,40,000 upfront and ₹60,000 after installation and the bank's check. Under a pay-after-installation rule such as Central Bank's, you hold the customer's ₹20,000 and fund materials and labour yourself until the bank pays ₹1,80,000. Ask the branch exactly how the margin reaches you, since the pages do not say.

If a branch pays only after installation, no clause fixes your cash gap. You can price for it, ask for a larger customer contribution, or decline that bank. How you fund the gap is a cash-flow decision outside this guide. The work order can at least make every rupee's source clear.

Fill the bank's trigger from its page or the branch, in writing, before you quote.

Two more points from the bank pages shape your paperwork. First, SBI lists the vendor-customer agreement among the vendor documents, so your payment clause may be read by the bank. Make it match your quotation (our quote template has the payment-terms section) and the price list version it came from (price list update routine).

Second, IOB says that once the applicant has chosen a vendor on the portal and completed the Jan Samarth journey, branches cannot switch the application to a different vendor.

The subsidy rule changes for a borrower. On redemption of the e-token, the CFA is credited to the loan account, and any excess over the outstanding loan goes to the customer's bank account (MNRE guidelines, 6s). SBI says the subsidy "must be credited in the customers loan account only". Tell loan customers this at signing: the subsidy reduces the loan, and it will not appear as cash.

When the loan disburses to you in stages: the Tranche Sheet

Stage-wise bank payments fail at the handover between three parties: you, the branch and the customer. A one-page Tranche Sheet, kept per loan job, closes the gaps. The ops lead owns the sheet and talks to the branch. The rep keeps the customer informed.

One sheet per loan job. The "gap" column tells you which branch is slow before it costs you a second job.

Four habits keep the sheet useful.

• Get the satisfaction letter on handover day. If the bank needs it (as Central Bank's page says), collect it at the same visit as the completion note.
• Quote the loan account number. Banks match payments and subsidy to it.
• When a tranche passes its stated window, escalate in order. The ops lead calls the branch. Then the customer visits the branch with you. Then the owner calls the branch manager. Log each step on the lead.
• Do not stop work for one late tranche without a clause. Write the pause rule first (clause 5), then apply it to every customer alike.

C&I jobs: milestones, retention and the 45-day rule

For a factory, a school or a hotel there is no CFA under this scheme (guidelines, section 5d). The customer pays from its own funds or its own business loan, through an accounts team with its own approval cycle. Your terms are a pure commercial contract, so the proofs matter even more.

Illustrative job. 100 kW rooftop plant for a small factory, ₹40,00,000 including GST (assumed), with the customer's own funds.

Illustrative: ₹40,00,000 incl. GST. The split and the retention are our suggestion. Retention is a commercial arrangement the buyer often asks for, not a legal requirement.

Two cautions. Retention needs a release event. "Retained until satisfied" invites a dispute, so write a date or a test. And approvals vary: see our commissioning process guide and the CEI glossary entry to decide what C4 includes for your state.

The 45-day rule, stated precisely

The Ministry of MSME's note on delayed payments says a buyer who does not pay a micro or small enterprise supplier within 45 days of accepting the goods or services owes compound interest, with monthly rests, at three times the bank rate notified by the RBI (Section 16 of the MSMED Act, 2006). The same note says state MSE Facilitation Councils handle delayed-payment references, to be decided within 90 days, and that any micro or small enterprise with a valid registration can apply. (Source: DC-MSME, Delayed Payments to Micro and Small Enterprises, undated; read 31 October 2026, and the site's security certificate may trigger a browser warning.)

What that means for a solar EPC:

• It protects you only if your firm is registered as a micro or small enterprise. Check the category on your Udyam certificate (MSME registration for solar businesses). A medium or unregistered firm is outside the note.
• We use it for C&I jobs. Whether it can be used against a household customer is a legal question we have not checked.
• Define "acceptance". If it is the day the customer signs the commissioning certificate, the 45 days have a start date.
• Keep any credit period in the agreement, within 45 days. Clause 6 shows wording.

We tried the Act's own text on India Code again on 31 October 2026 and the site did not respond, and the Ministry note does not cover every case, such as an agreement silent on credit days. Read sections 15 to 17 with your CA or lawyer before relying on this. For business finance options, see our solar business loan guide.

Payment-terms clauses you can adapt

These six clauses are starting points in plain English. Have your lawyer review your version once, then reuse it. Keep the work order, quote and bank file consistent. Square brackets are yours to fill. None of this is legal advice.

Clause 1: Payment schedule (home job, self-funded)

The Customer shall pay the Contract Price of Rs [amount], inclusive of GST at the rate shown on each invoice, in the following instalments:
(a) [30]% on signing of this agreement;
(b) [40]% on delivery of the modules, inverter and mounting structure at the site, shown by a delivery challan signed by the Customer;
(c) [20]% on completion of installation, shown by a completion note signed by the Customer;
(d) [10]% on commissioning of the system by the DISCOM.
Each instalment is due within [3] days of the Vendor's invoice.

Clause 2: Loan-linked schedule

The Customer has applied for a loan of Rs [amount] from [bank]. Work begins only after sanction. If the loan is not sanctioned within [ ] days, either party may cancel and the Vendor shall return the advance less documented costs.
The Customer shall pay Rs [margin] as margin on signing. The bank shall pay the balance to the Vendor as the bank requires: [trigger for tranche 1] and [trigger for tranche 2]. The Customer shall give any letter the bank needs within [2] days of request. The Customer's repayment to the bank is separate from this agreement.

Clause 3: The subsidy does not change the payment dates

Central Financial Assistance under PM Surya Ghar is paid by the Government to the Customer, or to the Customer's loan account where a loan is taken. It is not payable to the Vendor. The Customer's instalments under this agreement fall due on the events stated above and do not depend on the date on which any subsidy is received. The Vendor shall provide the documents needed for the subsidy application and help upload them.

Clause 4: Additional work

Work beyond the agreed scope needs a written estimate before it starts. It is invoiced separately, with GST, and paid by the Customer directly to the Vendor. It is not part of the Contract Price or any loan unless the bank agrees in writing.

Clause 5: Delay in an instalment

If an instalment is not received within [7] days of its due date, the Vendor may, after a written reminder, pause the next stage of work. Delivery and commissioning dates move by the number of days the payment is late. [Optional: interest of [ ]% per month on the overdue amount from the due date.] Neither party may withhold documents required for the subsidy or for DISCOM approval.

Clause 6: C&I acceptance, credit period and retention

"Acceptance" means the date on which the Buyer's authorised representative signs the commissioning certificate. The Buyer shall pay each invoice within [ ] days of its date, and in any case within [45] days of acceptance of the goods or services it covers. The retention of [10]% of the Contract Price shall be released on [date or named performance check].

GST on instalments. Show GST on every invoice. The PIB release from the Ministry of New and Renewable Energy (17 September 2025) records that GST on renewable energy devices fell from 12% to 5% from 22 September 2025 (PIB). A supply-and-install contract is billed under a goods and service split rather than at one flat rate: 70% of the value is deemed goods at 5%, and 30% is the installation service. 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. Our GST on solar installation guide covers the split. Ask your CA also when to raise an invoice against an advance. The amounts in this post are GST-inclusive.

The balance-collection routine: who calls, when, and what gets logged

Collection works when every unpaid peg follows the same ladder, whoever the customer is. This one starts before the peg is due, because most late payments begin as a surprise at the moment of asking.

The days are our suggestion. Fit them to your clause 5 and keep them fixed for every customer.

Accounts has one job that sits outside the ladder: confirm the credit on the bank statement before anyone marks a peg paid. A customer's screenshot is not money.

What to log on the lead

Use one line per peg, always in the same order: peg, amount due, invoice number, promised date, next step and owner. For example: "P3, ₹40,000, INV-0412, promised 14 Nov, rep calls 14 Nov." The owner can then read the whole balance position on Monday without calling anyone. In whatever CRM you use, tag unpaid jobs with a label such as "Balance due" so you can filter them in one view.

Four messages to save

Edit the wording to your own voice and send each one yourself.

HEADS-UP (2 days before)
Namaste [name] ji, installation at [address] finishes on [date]. The next instalment of Rs [amount] (stage: installation complete) becomes due on completion. We will share the invoice that day.

INVOICE (day 1)
Namaste [name] ji, installation is complete. Invoice [no.] for Rs [amount] is attached. Bank details are below. Please confirm the transfer date.

REMINDER (day 3 to 7)
Namaste [name] ji, a gentle reminder on invoice [no.], Rs [amount]. Could you tell us when to expect it?

OVERDUE NOTICE (day 10)
Dear [name], invoice [no.] for Rs [amount] was due on [date]. As per clause 5 of our agreement, [the next stage of work is paused until it is received / this is a formal reminder]. Please call [owner name] on [number] if you want to discuss a plan.

A worked example (illustrative)

A 5 kW home job in Vadodara, ₹3,00,000 including GST, on Structure A. P4 is 10%, so ₹30,000 is due on DISCOM commissioning. The rep sends the invoice on Day 1. On Day 3 the customer says he will pay after the subsidy arrives. The rep reads clause 3, explains that the subsidy goes to the customer's account and that the last peg is commissioning, and logs: "P4, ₹30,000, INV-0187, promised 12 Nov, rep calls 12 Nov." The customer pays on 11 Nov. The routine turned an awkward conversation into a scheduled one.

Where this breaks, and what to do about it

A clause is not collateral. Clause 5 removes the argument about whether you may pause work. It does not collect money. On the last peg there is no next stage to pause, so keep the final share small and the proof clean. If a customer will not pay, you still face the conversation, and perhaps a lawyer, at Day 30.

A bigger advance is not always safer. Asking for most of the price upfront can cost the deal and raises your refund exposure if the roof fails the survey or a loan is refused. Match it to your first-stage spend.

Do not use compliance as pressure. The model agreement puts five years of comprehensive maintenance and the subsidy documents in the vendor's scope. Withholding either to force payment goes against the model you are likely to base your agreement on. Customers can raise grievances on the National Portal, and vendors carry a rating consumers can see (guidelines, sections 10d and 11). A badly handled dispute can cost more than the unpaid instalment.

The exception. For a small job for a trusted referral, two pegs (advance, then balance on commissioning) are fine. Keep the proof regardless.

How QuickEstimate fits

Payment terms are a team rule, not a software feature. Quickest Solar CRM does not issue invoices, collect money, send payment links or confirm bank credits. Your accountant's bank statement stays the source of truth. What the CRM gives you is the place to run the ladder: one lead record with stages, labels, reminders and a log.

• Pipeline Management: lead stages are customisable, so add stages such as "Advance received", "Installed", "Balance due" and "Closed, paid". Use labels such as "P3 overdue" or "Loan tranche 2 pending", and filter leads by stage or label for your Monday list.
• Follow-up reminders and activity log: set a reminder on each promised date, and log the peg line on the lead. You can log an activity on several leads at once, which helps for a weekly "balance due" update.
• Team members with permissions: give the ops lead, accounts and reps their own logins and permissions. The dashboard and team report give you the team view.
• Proposal Generator: proposal templates carry your terms and conditions, so your payment-terms clause can sit in every proposal. Saved message templates hold the four messages above.
• Book a demo if you want help setting up these stages for your team.

What to do this week

1. Day 1: write your four pegs on one page: event, proof, owner and chase date for each.
2. Day 2: adapt clauses 1, 3 and 5 into your work order. Add clause 2 if you take loan jobs, and clause 6 if you do C&I.
3. Day 3: read the current page of every bank whose loans you take, and fill the Tranche Sheet triggers in writing.
4. Day 4: add the stages and the "Balance due" label to your CRM, and save the four messages.
5. Day 5: list every job with an unpaid peg today, set a reminder on each, and run the Day 3 call on the oldest one.

Frequently asked questions

What is a normal payment schedule for rooftop solar in India?

There is no official one. MNRE's PM Surya Ghar guidelines leave the schedule to the customer and the vendor, and the sample agreement's payment clause is blank. A reasonable start is four pegs: advance at signing, delivery, installation complete and commissioning, with the last 10% held back. Fit the percentages to your first-stage spend.

Can a customer pay in milestones under PM Surya Ghar?

Yes. The model agreement in the MNRE guidelines says the consumer may opt for milestone-based payment and that the milestones must be included in the agreement. The sample is a suggestion, so write your own pegs.

Does the installer receive the PM Surya Ghar subsidy?

No. The MNRE guidelines release the CFA to the consumer's account after the e-token is redeemed, or to the loan account if a loan is taken. Processing is stated as within 15 days of DISCOM approval, after the DISCOM has physically verified the system.

How does a bank pay the installer for a PM Surya Ghar loan?

It depends on the bank. On pages read on 31 October 2026, IOB pays 70% upfront and 30% within 30 days of satisfactory installation and bank verification. Central Bank pays after installation, on a satisfaction letter. SBI pays the vendor directly after the MNRE feasibility reports, with no stages described. Check before you quote.

What if the customer says they will pay after the subsidy comes?

Explain that the subsidy goes to the customer, not to you, and that your last instalment is tied to commissioning. Put that in writing at signing (clause 3) and follow the Day 3 and Day 7 calls. Do not hold back subsidy documents: the model agreement requires the vendor to provide them.

Does the MSME 45-day payment rule apply to solar customers?

The Ministry of MSME's note says a buyer who does not pay a micro or small enterprise supplier within 45 days of acceptance owes compound interest at three times the RBI bank rate. It helps only if your firm is a registered micro or small enterprise, and we use it for C&I buyers. Whether it applies to a household is a legal question we have not checked.

What GST rate goes on a solar payment invoice?

PIB records that GST on renewable energy devices fell from 12% to 5% from 22 September 2025. A supply-and-install contract is billed under a goods and service split: 70% deemed goods at 5%, and a 30% service portion at 9% central tax (18% integrated tax if inter-State), per serial number 38 of Notification 11/2017-Central Tax (Rate) on the CBIC tax portal. State tax follows each State's notification. Confirm your contract's classification and the timing of an advance invoice with your CA. Show GST on every invoice.