What do you imagine when you think of managing renewable energy projects? Is it the glory of saving the environment? Or providing double digit IRRs? Is it shaking hands with investors who believe in your project it a manager drinking their coffee while proudly looking upon a wind farm? You should be thinking about automating solar billing.
You’re only partly correct—so much of it is actually dealing with dozens of bills. This financial side, these bills and invoices, are such a large part of operating and managing solar assets…and they’re probably the easiest burden to automate.
We recently shared our invoicing feature, but let’s dig deeper into why we invested in tackling invoicing in the first place.
Why Automate Solar Billing?
In the case of bills that you have to keep track of and pay, there might be maintenance provider bills, insurance premiums, lenders’ fees, interest/loan payments, electrical payments for residual power during off hours, operator fees, and more. We’ll get back to the payment processes in another post but for now that’s a lot of money going out…but what about the money coming in?
Let’s take solar as an example. There are two main types of invoicing in solar. You probably use one of them. You’re either directly invoicing the client for the power generated (whether it be a utility, or the consumer in the case of a corporate PPA), or shadow billing (where you automatically get paid by the utility based on the meter).
In the first scenario, it’s your responsibility to send the offtaker accurate, detailed, timely invoices. Timeliness is often a debatable thing but if you think about the fact that offtakers can can take weeks to actually pay, so if you take weeks to give them the invoice, you’ll find your cash flow quickly becoming a problem. Sending out fast, accurate invoices is a must, and it has a great working capital advantage too. Quicker sent, quicker paid; but also more accurate = less disputed. All things that contribute to reducing the cash cycle of your project.
In the second scenario, while you don’t have to send out anything, you should create what is called a shadow bill—you take the information from the site and evaluate it to compare it to the statement or moneys received. A simple but oh so valuable aspect (even if it is to figure out that you are getting paid too much). It happens!
In any case most PPAs have specific windows during which you need to report inconsistencies. Failure to do so means revenue lost forever. But nevertheless this shouldn’t be a time sink for you and your team. It should be automated as much as possible so you can concentrate on all the other facets of your business.
Automating shadow billing, or any billing, is relatively easy…there’s no reason why you should leave these monotonous manual tasks to team members who could do more with their time and who could do errors in the process…
To start all you will need is a project, a PPA, an invoice template, some data and a budget. From there you have a clear path to automation to turn data and information into invoices. Whether it is seasonality, escalators, power factor penalties, time of use, you name it… PowerHub can automate it for you.
This data feeds everything. You don’t have to calculate and download it manually each time. Paste it in your billing Excel. Review it. Send it to accounting and then to the client.
As we all know, there’s a lot of copy-and-pasting that goes on in this industry. This takes up a lot of time, threatens your cash cycle, and leaves room for mistakes
Most of the solar energy industry is made up of lean organizations. A small group of people manage a large portfolio of projects – that’s the norm. We don’t see large numbers of employees on site and interacting with facilities at all times. Usually, it’s a small group managing 20, or 40, or 50 projects (or more).
They’re dealing with so much information and invoicing is only one part of that. They get invoices, they write invoices, they do the same exercises over and over again, they double check their information, they compare it to source—all of these reviews at such large volumes are the perfect example of when automation can save a business hundreds of man hours and thousands of dollars. Each and every month.
Using tools built by industry leaders for the renewable energy business (ehem, such as PowerHub) means you can automatically generate invoices to hack your billing process.
You can still maintain human control by setting up baseline mechanisms that flag any weird numbers that come in. You can set up controls, approvals, simplify the process, and get your invoices out unbelievably quickly.
If you’re using PowerHub, we can even automate sending that invoice. This is how we’ve moved clients from 20-day solar billing periods to 3-5 days.
Does that sound like the kind of efficiency you want to inject into your portfolio? Reach out to us.