When it comes to accounting for the solar installers’ business, there are a lot of moving parts that other businesses are not burdened with. In addition to the standard financial tracking and analysis, businesses in the solar industry contractors have to account for things like government incentives, renewable energy credits (RECs), project accounting standards, sales commissions, cashflow, and complex entity structures.
Because of all of these complexities, it’s important for businesses in the solar industry to ensure that their business software applications are geared towards managing and automating these business processes in a way that is aligned to the unique needs of the industry.
By teaming up with a company that understands the industry, you can ensure that your accounting and financial management business processes are being controlled in the most efficient and effective way possible.
Blu Banyan has been working closely with technology leaders in the solar industry to identify, explore and solve some of the most important accounting nuances in the industry with modern cloud technology.
Problem 1. Lack of Visibility into Project Costs
Solar projects can be complex beasts, with many different cost categories, such as materials, labor, overheads, project adders and more.
This can make it very difficult for businesses to get a clear picture of where their money is being spent, and to identify areas where cost savings can be made.
SolarSuccess – the award-winning business management software for solar installers, offers a complete solution for project accounting, allowing businesses to easily track and report on all solar system project-related costs. With SolarSuccess, residential, commercial, utility-scale solar installers, and developers can quickly and easily generate accurate project financials, and can use the built-in cost reporting tools to identify areas where cost savings can be made.
Problem 2. Managing Multiple Projects Under Limited Partnerships
The solar industry is made up of businesses that are often developing, owning and operating multiple projects at any given time. In order to raise the necessary capital for these projects, businesses will form Limited Partnerships (LPs) with different groups of investors.
The key challenge when it comes to accounting for LPs is ensuring that each project is being tracked and reported on in the right way, whilst also providing visibility for investors into the overall performance of their solar portfolio.
Investors need to be able to see how each project is performing against KPIs, what returns are being generated and crucially, when they can expect to receive their return on investment.
Again, this is where having a flexible and scalable solution in place is critical. With SolarSuccess, businesses can track and report on each project in the LP in real-time, providing full visibility for investors at all times.
Problem 3. Managing Investor Divestment and Transfer of Ownership for Solar Assets
The solar industry is an attractive investment for many reasons, not least because of the long-term nature of the asset. Government incentives in recent years have seen investors proactively planning to invest in the renewables sector as it is one of the most supporting industries from a grant and funding perspective.
However, as with any investment, there will be times when investors want to sell their interest in a project or asset. The most common catalyst for this is that government funding is coming up for expiry, and the ROI of owning the asset is likely to decrease.
When this happens, businesses need to have a process in place for managing the transfer of ownership and ensuring that the right information is being communicated to all parties involved.
With SolarSuccess, businesses can easily track and manage the transfer of ownership for solar assets, ensuring that the process is as smooth and efficient as possible.
Problem 4. Managing Inter-company Transactions for Businesses with a Multi-Entity Structure
Many businesses in the solar industry have a multi-entity structure, with different companies often owning and operating different parts of the business. This can make managing intercompany transactions incredibly complex.
There are a few key challenges that need to be addressed when it comes to intercompany transactions. Firstly, businesses need to ensure that all transactions are being properly recorded and accounted for. Secondly, businesses need to be able to reconcile their intercompany accounts on a regular basis. And finally, businesses need to have a process in place for managing the process of managing transaction consolidations as well as roll up reporting.
SolarSuccess offers a complete solution for managing intercompany transactions, from recording and accounting for transactions, to reconciling accounts and managing the automation of transaction creation and approval across multiple entities and groups of entities.
Problem 5. Ensuring Compliance with Changing Accounting Standards
The solar industry is subject to a number of different accounting standards, one of which is IFRS 16 Leases. This standard dictates how businesses should account for leases on their balance sheet, and the key challenge for businesses is ensuring that they are compliant with the standard.
In order to comply with IFRS 16, businesses need to have a complete and accurate picture of all their leases in one place. This includes both operational and non-operational leases. Furthermore, businesses need to be able to track and report on key lease metrics, such as lease term, lease payments and lease liability.
Problem 6. Complex Project Accounting
Project accounting is one of the most complex aspects of accounting for businesses in the solar industry. This is because businesses need to track and report on a large number of different project-related costs, such as materials, labor and overheads, project adders and more.
In addition to this, businesses need to be able to generate accurate financial statements for each project, which can then be used by investors to make informed decisions.
SolarSuccess offers a complete solution for project accounting, allowing businesses to easily track and report on all project-related costs. In addition, SolarSuccess also provides a range of pre-built financial statements that can be used by businesses to quickly and easily generate accurate project financials.
Problem 7. Revenue Recognition
Revenue recognition is a key challenge for businesses in the solar industry. This is because businesses need to account for revenue in a number of different ways, depending on the type of project and the stage of the project lifecycle.
For example, for construction contracts, businesses need to account for revenue on a percentage of completion basis. Similarly, for service contracts, businesses need to account for revenue as services are rendered.
SolarSuccess offers a complete solution for revenue recognition, allowing businesses to easily track and report on revenue for all types of contracts.
Problem 8. Managing and Streamlining the Reconciliation of Potentially Hundreds of Bank Accounts
In solar, a single project could have 4, 5 or more entities associated with the project. In addition, there can be multiple bank accounts for each entity. It is easy to see how this can quickly get out of hand, and how managing reconciliations without automation technology can be an incredible time consuming process that is fraught with risk and danger.
SolarSuccess offers a complete solution for the reconciliation of bank accounts, allowing businesses to quickly and easily reconcile all their bank accounts in one place. With integrated bank feeds, SolarSuccess ensures that the bank reconciliation process is as automated as possible.
Problem 9. Managing Collections and Customer Receivables Aging
Many solar companies offer loans or credit to their customers, which can mean from an accounting and financial management perspective, they are sometimes acting more like a bank than a traditional manufacturer or specialty subcontractor.
From managing customer credit applications to reporting to the Credit Bureau, solar companies are tasked with a huge amount of administration and reporting in order to continue to grow their customer base.
Many solar installers operate with a tight cash flow, which means for accounting and finance teams, it is imperative for them to keep on top of accounts receivable and ensure that customers are paying on time.
SolarSuccess offers a complete solution for managing customer receivables, including an accounts receivable aging report that can be used to easily track and report on customer payments.
Problem 10. Managing Acquisitions
Acquisitions are incredibly common in the solar industry. With the market being made up of businesses of all sizes, from small sole traders through to global solar enterprises, it’s no surprise that businesses are constantly looking for opportunities to acquire strategically aligned organizations that will help them to expand their solar portfolio and overall footprint in industry.
However, from an accounting and operational perspective, managing a successful acquisition requires deep planning, a thorough review of business and accounting processing along with scoping the transactional and system impacts of merging two businesses together.
Usually, the goal of an acquisition from a systems perspective is to migrate acquired teams onto the acquirers platform of technology. With so many technologies in place, this is not an easy feat. By having a solution that is flexible and scalable, like SolarSuccess, businesses can ensure that any merger is completed as quickly and easily as possible.
SolarSuccess is the only software solution on the market that offers a complete solution for businesses in the solar industry.
From solar system project accounting and revenue recognition, to managing customer receivables, sales commissions, and bank reconciliations, SolarSuccess has you covered.
If you are looking for a comprehensive software solution that will save you time and money, then look no further than SolarSuccess. Contact us today to find out more.
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