Offering net terms as a solar distributor, without the risk

How net terms work in solar construction supply

Net terms are simple on paper: the installer takes delivery of modules, inverters, racking or balance-of-system gear now and owes the full invoice 30, 60 or more days later. In solar supply they're less a courtesy than a structural necessity, because almost nobody downstream of the distributor can pay on delivery. A residential installer is typically funded by the homeowner's lender or lease provider at or after installation; a commercial EPC bills the project monthly through pay applications and waits for the draw to clear. Both need the gear weeks before the money that pays for it exists — so they buy from whichever distributor will carry them across that gap.

That makes terms a sales weapon as much as a finance decision: accounts consolidate purchasing with the house that gives them room, and a distributor insisting on prepayment is left competing on price alone. The catch is where the credit comes from. Whatever terms you get from manufacturers upstream are rarely as long as what installers ask for downstream, and the spread between the two lands on your balance sheet.

What the wait does to a distributor's cash

Selling on terms means every dollar of growth mints new receivables before it mints cash — and the wait runs longer than the paper says. Solar contractors on commercial work sit inside the construction payment waterfall, and 2025 surveys of subcontractors put the average wait after a pay application at roughly eight weeks, about double what general contractors believe they're paying in. A net-30 invoice into that world quietly behaves like net 45–60, and DSO drifts up while your own payables don't.

Then there's the risk itself. Distributor books in this vertical are concentrated — a handful of installer and EPC accounts often carry most of the receivables, so a single failure hits hard. And failures have been anything but theoretical: since 2023, more than a hundred U.S. solar companies have reportedly filed for bankruptcy or shut down, including two of the largest national residential installers. An unsecured receivable in an installer's liquidation recovers little. Mechanics-lien rights on supplied materials are the traditional backstop, but the deadlines are short, waivers get signed along the way, and residential volume means chasing many small claims at once.

How solar distributors handle it

The traditional toolkit first, honestly. Running your own credit desk — applications, trade references, personal guarantees, lien management, collections — works, costs headcount, and changes nothing about the core problem: you still finance the wait out of your own working capital. Trade credit insurance covers you if a buyer fails but pays nothing to make you liquid sooner, and insurers set named-buyer limits that sit uneasily with a book where a few accounts dominate. Invoice factoring converts issued invoices to cash in a day or two — advances of typically 70–90% of face value, fees of roughly 1–5% per invoice — but it's disclosed, so your customer receives a notice of assignment and pays the factor, and most "non-recourse" agreements cover only buyer insolvency, not disputes or slow pay; construction receivables with pay-when-paid or retention language are frequently ineligible. A bank line of credit is the cheapest money if you qualify — around 10–13% for approved borrowers in 2026 — at the price of covenants, borrowing-base reporting, availability of roughly 80–85% of eligible receivables, and a limit that doesn't grow just because a big EPC award did.

The structural fix moves both the wait and the risk off your book at the point of sale: Yellowpay pays the invoice within 2 business days and takes the buyer credit risk. You quote terms as part of the sale, the platform underwrites the installer, and the buyer keeps a normal invoice relationship — no notice of assignment. Terms are set per supplier at onboarding: most suppliers can offer up to net 90, and the buyer can choose to extend that on their side up to net 120 in total. Where it doesn't fit: the platform triggers when you invoice, so it does nothing for the containers you prepay to a module maker or the inventory sitting in your warehouse, and a very large single-project invoice can exceed one buyer's credit limit — heavy single-project concentration is factoring or bank territory.

What payment terms do solar installers actually expect?

Net 30 is the default for established trade accounts, with larger EPCs and commercial buyers pushing for net 45–60 — and in practice paying when their own draw or pay application clears. New accounts typically start on prepayment or card until they've built history, which is exactly the friction a terms program exists to remove.

Who takes the loss if an installer goes under?

Under self-funded terms or recourse factoring, you do — and most "non-recourse" factoring covers buyer insolvency only, not disputes or slow pay. Credit insurance or a genuinely non-recourse trade credit platform moves buyer default off your book; either way, read what's excluded before you rely on it.

Related

Glossary → · How much cash is your wait costing? → · Trade credit for solar construction supply →