25/02/2009 - 22:00

Solar rebate lag tests cash flow

25/02/2009 - 22:00

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FEDERAL schemes designed to increase the uptake of solar panels have created plenty of business for companies like Solar Unlimited, but the rapid expansion is providing a major management challenge for the Western Australian firm.

Solar rebate lag tests cash flow

FEDERAL schemes designed to increase the uptake of solar panels have created plenty of business for companies like Solar Unlimited, but the rapid expansion is providing a major management challenge for the Western Australian firm.

As one of the main installers of solar energy systems in Western Australia, the company has lifted staff numbers from five to 19 in just three months and moved to larger premises in Wangara.

Like other fast-growing businesses, Solar Unlimited has had to adapt its strategy to ensure cash flow is carefully managed.

The solar industry has been on a turbulent ride during the past year since the federal government decided to means test its $8,000 solar photovoltaic rebate.

That decision initially led to fears of a sharp fall in business, but Solar Unlimited owner Keiran D'Arcy said the publicity had the reverse effect of increasing community interest.

"That was a real lift," Mr D'Arcy told WA Business News.

And customers are likely to take advantage of a solar credit scheme that will replace the $8,000 means-tested offer on July 1.

The WA Sustainable Energy Association confirmed that the second stimulus had further increased activity within the industry, with figures from December showing installation numbers had more than quadrupled since the introduction of the package in June 2007.

Mr D'Arcy said his business had experienced a 300 per cent increase in inquiries over the past few months, with the sudden growth bringing a new set of problems.

The government is battling to process the influx of grant approvals. In some cases it is taking up to eight weeks to reimburse small business for installation. This, in turn, can affect a company's ability to pay creditors.

The association's chief executive, Ray Wills, said the delays were not the fault of those processing the large number of applications, but rather the cumbersome rules for issuing the rebates.

"While scrutiny is absolutely essential in the expenditure of public monies, the level of detail required for an $8,000 rebate is too onerous," Dr Wills said. "The federal government has committed to expend public funds to boost investment in delivering renewable energy to homes and community facilities, but the process of providing rebates to businesses is too slow, meaning that many are put under financial pressure which in turn is reducing the roll-out."

Mr D'Arcy stressed the importance of open communication with his bank to help manage cash-flow issues.

"We have an understanding bank. We saw the impact it would have on our business when the grant was first announced, and we've figured it into our six-month business plan," he said.

He suggested businesses let their banks know what was coming up.

"Let them know three, six, nine months before it comes up. We've been doing that," he said.

"They like to know what we are going to do and how we are going to do it. It's all about communication."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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