Solar Cash Conversion Cycle Calculator

It is the number of days between money leaving your business and money coming back on the same deal. In residential solar the outflows are materials, ordered at notice to proceed, and install labour, spent around install day. The inflows are the funding milestones, commonly a draw at install start and the balance at completion, each landing after the lender's remittance lag. The gap between the weighted average outflow day and the weighted average inflow day is the cycle, and it is what your working capital is actually financing.

A working capital calculator sizes the balance, how many dollars are tied up in materials at any moment. This one sizes the duration, and it includes install labour as well as materials. The distinction matters because they respond to different levers: shortening permit and inspection time moves the inflow day earlier and shrinks the cycle, while removing the upfront material payment shrinks the outflow itself. Businesses usually need both numbers, and most only ever look at one.

Four things, and only one of them is negotiable with a lender. Time from signature to NTP, which is mostly site survey delays and unsigned redesigns. Time from NTP to install, which is permitting and material lead time. Time from install to completion, which is inspection, corrections and utility close-out. And the lender's remittance lag after each milestone. Operators tend to focus on the last one because it feels like the lender's fault, but the first three are usually larger and are within your control.

It helps and it is not a fix. Shifting more of the funding to the first draw moves your weighted average inflow day earlier, which shortens the cycle. But if materials are paid at NTP and M1 does not trigger until install start, you still carry the full material cost across the entire NTP-to-install window, however the draw is split. Draw structure moves the inflow; it does nothing about when the outflow happens.

Roughly your monthly deal volume multiplied by the cycle length in months, multiplied by the cash out per deal. At fifteen deals a month with a sixty-day cycle, you are carrying about thirty deals' worth of materials and labour at any moment. That is a rolling balance rather than a one-off cost, which is why it constrains growth: taking on more volume increases it proportionally, and it does so before any of the extra revenue arrives.

Direct Pay supplies materials with no upfront working capital required, which removes the largest outflow and the earliest one. In the model that means the material payment at NTP disappears and the remaining exposure is install labour, spent around install day, later in the cycle and smaller. The effect on the cycle is usually larger than any realistic improvement in lender remittance timing, because it removes the outflow rather than accelerating the inflow.

It is a simplified two-draw model. It assumes materials are paid when the order is placed at NTP, install labour is spent around install day, M1 triggers at install start and the balance funds at completion, with a single remittance lag applied to both. Real funding agreements differ in both trigger and timing, some products fund in a single draw, and payment terms with distributors and install crews vary. Carry cost is shown at an illustrative 8% annual rate. Treat the output as a ballpark for comparison, not as a forecast.