Net terms and trade credit mechanics
How reusable Net-30 and Net-60 terms get underwritten and how they scale as an installer or distributor's order volume grows, covered from qualification through credit-line expansion.
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Financing Playbooks
Net terms, project finance and tax credit transferability mechanics, covered for how they actually apply to a deal.
Talk to our teamFinancing Playbooks
Read a financing playbook covering net terms, project finance structures and tax credit transferability mechanics for solar deals, on Sunhub.
What this guide covers
Escrow structures for larger deals
Milestone escrow mechanics for equipment orders large enough that neither party wants to be first to release money or goods, walked through with the conditions that typically trigger release.
Tax credit transferability, mechanically
How a Section 6418 transfer actually executes, what buyer diligence looks like, and where current transfer pricing sits, roughly 90 to 95 cents on the dollar for ITC transfers.
Who this is for
Businesses evaluating a financing structure for the first time
Guidance assumes no prior tax equity or transferability experience, building from the basic mechanics up.
FAQs
How does tax credit transferability actually work under Section 6418?
Section 6418 lets an eligible taxpayer sell certain clean energy tax credits, including the investment and production tax credits, to an unrelated buyer for cash, and that cash payment is not taxable income to the seller nor deductible by the buyer. The transfer is generally a one-time sale per credit, made through an IRS pre-filing registration process, and the buyer claims the credit against its own liability. This gives project owners a way to monetize credits without a traditional tax-equity partnership. Specifics depend on current IRS guidance, so confirm the mechanics with a qualified tax advisor.
What qualifies a business for reusable net terms across suppliers?
Reusable net terms generally rest on a credit review of the business, covering time in operation, financial statements or bank data, trade references, and payment history, so an approved buyer can carry the same terms across multiple suppliers instead of requalifying each time. Stronger, more consistent payment history typically supports higher limits and longer terms. Sunhub structures net terms so an approved buyer's standing travels with them across the marketplace.
How does escrow structure differently on a large equipment order versus a small one?
On a large order, escrow is usually milestone-based, releasing funds in stages tied to production, inspection, shipment, or delivery, which protects both sides on high-value, longer-lead exposure. A small order more often uses a simple single release on delivery or acceptance because the exposure and lead time are lower. The larger the commitment, the more the release schedule is engineered around the deal's specific milestones.