When you assign STCs you are extending credit. You have done the work, the trader holds the certificates, and until it pays you are exposed to its ability to pay. That is why installers ask about bank guarantees and credit limits.
Bank guarantees
A bank guarantee is a promise from a bank to pay if the trader does not. In the STC market it is unusual to see one offered to an installer, and asking for one will often just end the conversation. It is a fair question for large commercial volumes, and some traders hold guarantees or trading facilities of their own. If a trader will not offer one, that is not a red flag by itself. What matters is how long your money is exposed.
Credit limits
A credit limit works in the other direction. Some traders cap the unpaid volume they will carry for a single installer, particularly new ones, or ask for prepayment on large claims. It is a sensible control, but you need to know the number. Ask whether any cap applies, how it grows and what happens to claims above it.
What to check instead
- Settlement time. The shorter the gap between lodgement and cash, the smaller your exposure. See 20 days versus 1 day.
- Track record. How long has the trader operated and under what entity? Ask for references from installers of your size.
- Backing. Is it part of a larger group, and is that group stable? Energy Merchants is backed by REC Traders, trading since 2004 and a Smart Energy Council member.
- Contract terms. Late-payment remedies, set-off rights and how quickly you can stop assigning. See what to check in a trader contract.
- Signals. Other installers reporting slow payment in the same weeks. Read what to do if a trader pays late.
What this means for installers
You cannot remove counterparty risk, but you can shrink it. Choose a trader that settles in days, not weeks, keep each assignment small relative to your cash buffer, and watch the first few payments closely. If a trader slips, stop assigning new work until the backlog clears. If you have already been caught out, what to do when a trader owes you money sets out the steps. At Energy Merchants, established partners are settled within 24 hours, with the first claim taking 48 to 72 hours while details are verified. Rates are on the pricing page, and the switch page explains how to move over cleanly.