How to get working capital for a solar order

Why not just use your reserves

The instinct is to pay for an order from your own cash. On a solar order that is usually the most expensive choice, because it locks up the working capital the rest of your business needs. The solar payment cycle is structurally awkward: you pay suppliers up front, but your customer pays you against milestones, weeks or months later. Funding that gap from reserves is exactly why solar EPCs run out of working capital.

The better approach is to attach financing to the order itself, so the purchase is funded by the transaction, not your balance sheet. Which tool you use depends on where the gap sits, and this post walks through the choice. For sizing the requirement first, see how much working capital does a solar project need.

PO Finance: fund the order before payment

For most solar orders, Purchase Order Finance is the default tool. It funds the confirmed order, up to 100% of its value, with a decision in around 48 hours, so you can pay your supplier while you wait on the customer milestone.

It fits when you have a confirmed order and the gap is timing, you will be paid, but after you have to pay the supplier. Because it underwrites the transaction rather than your balance sheet, it scales with your order book and does not dilute equity. See what is purchase order financing and the PO Finance program.

Trade Finance: for imported orders

If the order is an import, Trade Finance and a Letter of Credit are built for it. An LC lets you pay the overseas supplier safely, they are assured of payment against compliant documents, and you are protected from paying for goods that do not meet terms. Trade Finance can also lock the INR rate, protecting your margin from a currency swing between order and payment.

See Trade Finance and LC, and for the import context, how to import solar panels into India and what is a letter of credit in solar imports.

Invoice discounting: release cash you are owed

If your cash is tied up in invoices you have already raised, invoice discounting releases it, turning an unpaid receivable into working capital you can deploy on the next order. It fits the moment after delivery, where PO Finance fits before. See Invoice Discounting and how invoice discounting works for suppliers.

Choose, and combine, the right tools

The choice is not about which tool is best, it is about where your cash gap sits. And you can combine them: PO Finance to fund the order, Trade Finance to handle the overseas payment, invoice discounting to release the cash once delivered. Used together, they can cover most of an order's working-capital need, keeping your reserves free.

The efficient way to do this is to source and finance in one motion: post an RFQ, accept the best verified quote, and attach financing to that order. See how to finance a bulk solar panel purchase for the full menu, and PO Finance vs invoice discounting vs vendor payment for the detailed comparison.