Why Your Solar Service Department Looks Unprofitable (And How to Fix It)

If your service department looks like a money pit on paper, you might not have a service problem – you might have an accounting problem.

In a recent HeatSpring PRO Circle discussion with Amanda Bybee, CEO of the Amicus O&M Cooperative, this critical insight came up: many solar companies treat operations and maintenance as a necessary cost of doing business rather than the profit center it can be. The issue often comes down to how revenue is recognized. When service work is tied to warranty obligations or long-term contracts, companies frequently recognize all the revenue upfront during the initial installation. When customers call months or years later needing service, it shows up as pure cost with no offsetting revenue. Suddenly, your service team looks like a drain on resources rather than a valuable asset.

The reality is that O&M work can have great margins. When accounted for properly – holding back revenue as unearned until the service is actually delivered – it becomes clear just how profitable this work can be. More importantly, it shifts how leadership thinks about investment in the service department. Instead of asking “Why are we spending money on a department that loses money?” you start asking “How can we grow this profitable part of our business?”

This accounting shift is all about recognizing O&M as the revenue-generating opportunity it truly is. If you’re ready to build out your service capabilities and train your team to capture this opportunity, the Amicus O&M Cooperative’s Solar PV and BESS Operations & Maintenance Tech 1 Training provides the technical foundation your team needs to deliver profitable, professional service that keeps customers happy and your bottom line healthy.

Transcript below.

Brian: You might not realize how much accounting matters in this way. When we first started HeatSpring, we would do all these in-person events and sometimes people just wouldn’t show up because they got sick or got busy. We started holding that money back as unearned revenue. Then when they came to the next event, we were psyched because we could recognize that revenue. We were providing really good customer service to them. We treated them great. If we had not held that money back, it would’ve been an annoying cost and we would’ve been kind of annoyed that they wanted to come to another event.

I see that as a customer in so many different scenarios. And in this case, it is so true. If you’re recognizing revenue as a result of getting that call from that customer, you’re like, “Oh great, this is just as exciting as a new sale.” It’s so important.

Amanda: Exactly. To your point there, it helps accomplish a real shift in thinking in the leadership of the company. If you’re the CEO or CFO and you’re looking at the books and you say, “Man, the service department is a drag. Why would I spend money or hire more people for a department that’s losing us money? That doesn’t make any sense. That’s not smart business.”

But what you have in that case is an accounting problem, because you’re not recognizing the revenue that you should be recognizing for that work. This is a really key moment in time when you can recognize that and see that service work is actually quite profitable. It may not be the same volume of dollars that you are seeing on your EPC side because you’re not procuring large volumes of expensive material – it is a much more labor-based department. But it has great margins. Once you do start to see volume there, it should absolutely start to contribute meaningfully to your bottom line.

We’ve seen this. I’m not making this up. This isn’t a theoretical accounting exercise. We’ve seen our member companies recognize this, and it’s been one of the most fulfilling parts of this role that I get to play: working with so many amazing member companies who care deeply about their customers and who can start to see real profit coming off of this business that is fundamentally a stewardship role. Our mission as the cooperative is to elevate the stewards of sustainable energy systems. That’s really what fuels me – helping these companies do good and do well for themselves all at the same time.

But if you don’t have the right information in front of you, you won’t make the investment in this. I guess the key takeaway here is that once you can see the profitability of this department, you’re going to be a lot more excited to grow it, to put resources into it, and to hire more people.