Solar Installers: Recording Equipment Purchases, Warehouse Stock and Returns

What solar equipment books need to track

A solar install is mostly equipment. The panels are the biggest cost. Racking, inverters, wire, conduit, batteries and monitoring hardware sit close behind. The way you buy and store that gear changes what your books show.

Most solar shops buy in bulk. You order a pallet of panels because the price is better by the pallet. You order racking and inverters by the job or by the truckload. Some of it sits in a warehouse for weeks. Some goes out the same week. When every buy goes to one flat materials line, your cost jumps around. You look busy one month because you stocked up, and you look cheap the next month because you lived off the shelf.

The question your books need to answer is simple. Did the cost match the work? When a pallet sits in the warehouse for three weeks and then goes on three roofs, the cost should split across those three jobs, not land in one big pile the week you paid the bill.

Here is what a clean equipment line looks like.

When the cost follows the panel to the roof, your profit per install is real. When it sits in one pile, you are guessing.

How to hold equipment as warehouse stock

Panels and racking are the reason a solar shop needs a stock line. You buy a pallet of panels because the price drops by the pallet. You buy a full bundle of racking because you do not want to run out mid job. Each buy is bigger than one roof.

The clean way is to hold the full buy in a warehouse stock account when you pay for it. The cost sits on the shelf. When a crew pulls ten panels for a job, the cost moves from the warehouse account to that job. The warehouse account goes down and the job cost goes up by the same amount.

When the warehouse account matches the shelf, your books tell the truth. When you buy a pallet and expense the whole thing at once, your materials cost spikes in the month you paid the bill and drops the next month, even though the work was the same both months.

Here is how to keep warehouse stock clean.

• **Hold bulk equipment buys in a warehouse stock account: ** not in the materials expense line.
• - **Move the cost to the job when a crew pulls it: ** not at the end of the month from memory.
• - **Count the warehouse now and then: ** so the stock account matches what is on the shelf.
• - **Count the van stock too: ** panels that ride in a truck are still stock until they go on a roof.
• - **Watch the slow movers: ** old panels that never get used tie up cash.

When the warehouse line matches the shelf, the books stay clean month to month.

How a panel moves from warehouse to van to roof

The hard part is not buying the panels. The hard part is moving the cost from the warehouse to the van to the roof. This is where most solar books get messy.

A panel has three homes. It sits in the warehouse. It rides in a van. It goes on a roof. The cost should follow it each step. When it sits in the warehouse, the cost sits in the warehouse account. When a crew loads it on the van, the cost can stay in warehouse stock or move to a van stock account. When it goes on the roof, the cost lands on the job.

The clean way is to log the move the day it happens. A crew pulls ten panels for a job. You move the cost from the warehouse account to that job. Ten panels times the cost per panel. The warehouse goes down. The job cost goes up. The total does not change.

The messy way is to wait until month end and guess. The crew does not remember which job got which panels. You split the pallet evenly across the jobs. Now the cost per job is a guess, and the warehouse account does not match the shelf.

Here is how to keep the move clean.

• **Log the pull the day it happens: ** not from memory at month end.
• - **Move the cost by the number of panels used: ** not by an even split.
• - **Keep a simple pull sheet: ** a crew writes down how many panels went to which job.
• - **Tie the move to a job name or class: ** so the cost lands on the right roof.
• - **Check the warehouse against the stock account now and then: ** so the two match.

When the cost moves the day the panel goes out, the profit per install is real. When it moves at month end from a guess, the profit is a story you told yourself.

You can read more about how we tie each panel to the job on our solar installers bookkeeping post.

How returns and damaged units go back

Not every panel goes on a roof. Some arrive damaged. Some come in the wrong size. Some get scratched on the van. Some fail inspection after they go up. Each one needs to go back, and the books need to show it.

A return is a panel that leaves the warehouse and goes back to the supplier. The cost comes out of the warehouse stock account. If the supplier sends a refund, the money lands in the bank. If the supplier sends a credit, it sits on the supplier account until you use it on the next order. Both need their own line.

The clean way is to move the panel out of stock the day it goes back. The stock account goes down. If a refund comes in, it matches the bank. If a credit sits, it waits on the supplier account until the next order uses it.

The messy way is to leave the panel in stock after it goes back. Now the warehouse count says you have more panels than you do. Or the refund lands in the bank and no one moves the stock account down. The two drift apart, and the next count is wrong.

Here is how to keep returns clean.

• **Move a returned panel out of stock the day it goes back: ** not when the refund lands.
• - **Match a refund to the bank: ** the cash that came back ties to the return.
• - **Track a credit on the supplier account: ** until the next order uses it.
• - **Write off a damaged unit that can not go back: ** as a small loss, not a job cost.
• - **Keep a return log: ** what went back, when and why.

When returns move the day they happen, the warehouse count stays real. When they sit, the shelf and the books drift apart.

How supplier credits and refunds show up

A supplier credit is not the same as a refund. A refund is cash that comes back. A credit is a promise that the supplier will take the amount off your next order. The two sit in different places in the books.

When a supplier issues a credit for a returned panel, the credit sits on the supplier account. It lowers what you owe that supplier, or it lowers the cost of the next order. When the supplier sends a refund, the cash lands in the bank and the supplier account clears.

The clean way is to record the credit the day the supplier issues it. It sits on the supplier account. When you place the next order, the credit lowers the amount you pay. The new panels go into stock at their net cost, not the full invoice cost.

The messy way is to ignore the credit until it shows up on the next invoice. Now the next order looks more expensive than it was, because the credit hid inside it. Or the credit sits on the supplier account for months and no one knows it is there.

Here is how to keep credits clean.

• **Record a supplier credit the day it is issued: ** not when the next order arrives.
• - **Match a refund to the bank: ** the cash that came back ties to the return.
• - **Apply the credit to the next order: ** so the new panels go into stock at net cost.
• - **Check the supplier account now and then: ** so old credits do not sit forgotten.
• - **Keep the credit apart from a discount: ** a credit is a return, a discount is a price cut.

When credits sit on the right line and move when they are used, the equipment cost stays real. When they hide inside the next order, the cost per panel drifts.

How the month end close works for equipment stock

At month end, the warehouse stock account needs a check. The account should match the shelf. The van stock should match the van. If the two do not match, something was pulled and not logged, or something came back and was not recorded.

We start with the bank. We match each equipment buy to the payment that cleared. We count the warehouse and the van and match the counts to the stock accounts. We move any costs that were pulled but not logged. We record any returns that went back but were not booked. We clear any supplier credits that were used. Then we add up the month by job and by class. The income and the equipment costs sit side by side, and the profit per install shows.

Here is a simple month end check for equipment stock.

• **Match each equipment buy to the bank: ** every payment cleared.
• - **Count the warehouse shelf: ** match it to the warehouse account.
• - **Count the van stock: ** match it to the van account or the warehouse account.
• - **Move any costs pulled but not logged: ** so the jobs carry the right cost.
• - **Record any returns that went back: ** so the stock goes down.
• - **Clear any supplier credits used: ** so the next order lands at net cost.
• - **Run the profit and loss by class: ** so the jobs show side by side.

When the close runs every month, the stock accounts stay clean. When it skips a month, the shelf and the books drift apart, and the next month is harder to close.

A situation we clean up

The warehouse that never matched the books

A solar shop buys panels by the pallet and racking by the bundle. Every buy goes to one flat materials line. No one tracks what was pulled for which job. At month end, the materials line jumps around. One month it is high because a pallet came in. The next month it is low because the crews lived off the shelf. The owner can not tell which install ate the most panels. The warehouse has no count for months, and when someone does count it, the shelf and the books do not match. A stack of returns sits by the door, and none of them moved out of stock.

Here is how we handle it. We set up a warehouse stock account in QuickBooks Online and a van stock account. We move the bulk buys from the flat materials line into the stock accounts. We count the shelves and the vans and match them to the accounts. We start a simple pull sheet so each crew writes down how many panels and how much racking went to which job. We move the costs to the jobs by the amounts used. We record the returns by the door and move them out of stock. We match the supplier credits to the returns and clear them on the next order. We close each open month one at a time, from the oldest forward. Then the routine runs every month, so the shelf and the books stay in sync.

Mistakes we fix

• Every panel buy booked to one flat materials line
• A pallet expensed in the month it was bought
• No warehouse count, so the stock account drifts
• No pull sheet, so costs move at month end from a guess
• Returns left in stock after they went back to the supplier
• Refunds that landed in the bank with no move out of stock
• Supplier credits that sat on the account for months
• A damaged panel written off to a job instead of a small loss
• Van stock never counted, so panels that rode in a truck were lost
• No profit and loss by class run at month end

Common questions

Should I hold solar panels as warehouse stock or expense them? Hold bulk buys as stock and move the cost to the job when a crew pulls them. Expense small same day buys on the spot. When the big buys go to stock and the small buys go to the expense line, your month to month cost stays steady.

How do I move a panel from the warehouse to a job? Log the pull the day it happens. A crew writes down how many panels went to which job. Move the cost from the warehouse account to the job by the number used. The warehouse goes down and the job cost goes up by the same amount.

How do I handle a return? Move the panel out of stock the day it goes back to the supplier. If a refund comes in, match it to the bank. If a credit sits, track it on the supplier account until the next order uses it. Do not leave the panel in stock after it goes back.

How does the month end close work for equipment? Match each buy to the bank. Count the warehouse and the van and match them to the stock accounts. Move any costs pulled but not logged. Record any returns. Clear any credits used. Run the profit and loss by class so the jobs show side by side.