Chapter 7: Hardcore version of quotation, gross profit, cash flow, exchange rate and inventory model

7.1 Let’s first explain the basics of taxation: VAT, CIT, and service fee accrual.

The English page of the Revenue Department provides a basic foundation that is very suitable for training. First, the general rate of VAT in Thailand is currently7%; Second, any person who continues to sell goods or provide services in Thailand and whose annual turnover exceeds1.8 million THBentities should generally be included in the VAT system; third, the general corporate income tax (CIT) tax rate is20%net profit. That said, quote and profit discussions go beyond just looking at the ‘total price’ and also understand how taxes and bills impact cash flow.

The same set of RD materials also gives common withholding tax standards: for example, payments to Thai companies or foreign companies with permanent establishments in ThailandService and professional service fees, the common withholding tax rate is3%; Payment to a foreign company without a permanent establishment in Thailand is usually5%. This makes sense for your settlement design with Chinese suppliers, overseas technical services, or local subcontracting.

Business teams need to know: Tax isn’t just for accountants. VAT affects customer bills and repayment experience, CIT affects profit caliber, and withholding tax affects service fee settlement and contract net amount. Without talking about taxes, the quotation can easily appear high or low, but the team themselves don’t know why.

7.2 Quotation is not a pat on the head: How should the standard quotation structure be broken down?

The most effective way to train business and finance is not to tell everyone ‘how much gross profit is required’, but to first break down the quotation structure. A standard photovoltaic project quotation should at least be broken down into: main equipment materials, auxiliary materials, labor, survey and design, logistics and hoisting, grid connection and data, after-sales reserves, marketing allocation, exchange rate buffer and target gross profit. Only after taking it apart did the team know what they were selling.

The front-line quotations for many projects seemed reasonable, but later it was discovered that the manpower for grid connection information, after-sales visits, image archiving, customer training, and even monitoring and commissioning were not included at all. The result is not that customers take advantage, but that the company itself forgets about the costs it must bear.

Therefore, quotation templates must be standardized. It is not for administrative beauty, but to prevent the same company from quoting two completely different sets of cost logic for similar projects.

7.3 Gross profit is not equal to real profit: we must think in terms of profit waterfall chart

The most common misunderstanding in business is to regard the contract gross profit as the final profit. In fact, what you get at the moment of signing the contract is only the "quotation gross profit", and there are still a lot of variables that may erode the project income from the real profit. The correct training method is to use a profit waterfall chart.

The basic logic of the profit waterfall is: starting from the contract revenue, first subtract direct materials and direct labor to get the project gross profit; then subtract survey and design, grid connection data, transportation, and installation management to get the contribution gross profit; then subtract rework, after-sales reserves, exchange rate losses, bad debt provisions, and marketing apportionment to get close to the real operating profit. As long as the team does not have this awareness, it will continue to overestimate its ability to make money.

Management should require project reviews to look at at least three levels of profit: quoted gross profit, completion gross profit, and true profit after 90 days. Only in this way can we see whether the problem lies in quotation, delivery or after-sales.

7.4 Payment collection design: why node arrangement is more important than payment techniques

Companies with good cash flow may not necessarily be the most aggressive in collecting payments, but they must design payment collection nodes more scientifically from the beginning of the contract. For household projects, it is recommended to at least bind the repayment to verifiable nodes of the project, such as signing deposit, pre-construction/material arrival, completion of main installation, grid connection/acceptance delivery. For small commercial and complex projects, more emphasis should be placed on synchronization with design, equipment procurement and grid connection nodes.

There are two extremes that are most feared in the payment collection design: one is that the balance is left behind for the purpose of signing the contract, causing the system to generate electricity but the customer has no pressure to pay; the other is that the node setting is out of touch with the actual project, and the customer feels forced to pay and lacks cooperation. A truly mature node design not only protects cash flow, but also conforms to project reality.

Sales must know: every time a node is relaxed, the company is incurring additional financing costs. Project managers also need to know: If the final payment is delayed due to poor documentation or acceptance, it is not a financial problem in nature, but a delivery problem.

7.5 Exchange rate is not a financial abstraction, but a real cost variable for Chinese supply chain companies

Since a large amount of your main materials come from China, the exchange rate is not a problem of the financial department itself, but a profit variable determined by quotation, procurement and payment collection. BOT's foreign exchange page publishes the average buying and selling exchange rate of commercial banks and the weighted inter-bank exchange rate every day, which shows that companies can establish their own exchange rate observation habits instead of passively accepting the results when purchasing and paying.

For example, on April 30, 2026, the BOT page shows that the weighted interbank exchange rate is approximately32.769 THB/USD. This number by itself won’t tell you whether the project is making money, but it reminds you: there must be buffering logic for cross-currency purchases. If the quotation is locked in THB and the purchase is settled in RMB/USD, the quotation validity period, advance payment time and price locking rhythm will all affect the final gross profit.

The most important thing in the training is not to let the business learn hedging, but to let the business know that the quotation validity period, deposit ratio, purchase price lock and exchange rate buffer are not deliberately conservative in finance, but to protect project profits.

7.6 Inventory and spare parts: Why ‘stocking too much’ and ‘having nothing at all’ are both dangerous

Inventory management is most afraid of two extremes: Either for fear of shortage, a large amount of money is invested in slow-moving parts; or in order to reduce inventory, on-site and after-sales are frequently interrupted due to missing parts. Especially when there are many household projects and scattered small businesses, what is really needed is tiered inventory: standard auxiliary materials are always in stock, key spare parts are in limited stock, and main equipment is locked by project.

Procurement and warehouses must know: more inventory is not safer, but the clearer it is, the safer it is. You must at least know which are Class A high-frequency standard parts, which are Class B parts purchased on a project basis, and which are Class C after-sales key spare parts. This layering will be even more important for future EaaS/EMC as downtime losses will be more sensitive.

Without stratification, companies will fall into a very common vicious cycle: they usually feel like they have a lot of inventory, but when something goes wrong, they are always short of key items.

7.7 Financial KPIs that management must look at, otherwise profits will only remain in their feelings.

Financial KPIs should be more than just ‘signings this month’. For a business structure like yours, it makes more sense to look at profit, cash flow, and quality all at the same time. At least it is recommended to look at: quoted gross profit margin, completed gross profit margin, 90-day real profit margin, weighted collection days, balance overdue rate, exchange rate loss rate, inventory turnover days and after-sales reserve utilization rate.

As long as these items are looked at at the same time, management can quickly determine whether the problem lies in front-end quotation, procurement execution, on-site delivery or after-sales tail. A truly good financial chapter does not make finance more difficult, but allows business and engineering to learn how to keep money.