Finance & Cash Flow
One big customer feels like success. It can also be the biggest risk you carry.
A large customer is welcome: steady orders, less selling, a name to mention. It also quietly shapes the business, from the prices you accept to the payment terms you tolerate. If that customer pays late, cuts orders or leaves, the effect on cash is immediate. This session helps owners measure how exposed they are, understand what the dependence is costing them today, and plan sensible steps to widen the base without walking away from good business.
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Loyalty can run in only one direction.
When a large share of sales comes from one or two customers, those customers hold a great deal of power, whether or not they use it. They may negotiate hard on price, stretch their payments or change their requirements, and the business goes along because it cannot afford to lose them. Meanwhile, ordinary events such as a change of purchasing manager, a competing supplier or the customer's own financial difficulties can remove a large part of the income overnight.
None of this is an argument against serving big customers well. It is an argument for knowing the exposure and acting on it before it becomes a crisis. There is no single percentage that is safe for every business; the right level depends on the industry, the contract and the owner's own reserves. The session helps owners judge their own situation.
What the session covers
30 topics across 6 areas. Six parts, each with an exercise on the owner's own figures.
Measuring the DependencePut a number on it.5
An illustration (made-up, round numbers): of 100 rupees of sales, 45 rupees come from one customer and 20 from a second. Two customers account for 65 per cent. Participants build the same table from their own records, and nobody is asked to share it.
- Listing customers by sales over the last twelve months
- The share of income from the largest customer, and from the top three
- The share of profit, not just sales, from each of them
- Whether the share is rising or falling over time
- Concentration in other things too: one product, one supplier, one channel
What If They Left Tomorrow?The stress test.5
- Income lost, and costs that would remain
- How many months the business could carry the gap
- What would be cut, and what could not be
- What if they stay but pay sixty days late instead of thirty?
- The difference between a loss of orders and a loss of cash
The Hidden Cost of DependenceWhat the risk is already costing.5
- Discounts given because refusal feels impossible
- Payment terms that you would not accept from a smaller customer
- Special requests that disrupt other work
- Capacity reserved for one customer and left idle for others
- Decisions about growth that depend on one customer's plans
The aim is to see the real cost, not to blame a customer. Many large buyers are fair and simply never asked.
Widening the Base GraduallyWithout abandoning good business.5
- Where else existing products and skills could be sold
- Asking the current customer for introductions, where appropriate
- Setting a small share of time each week for finding new customers
- Smaller customers: slower to win, but often better on price and payment
- Accepting that diversification takes months, not weeks
Strengthening the Relationship ItselfReducing dependence is not the only protection.5
- A written agreement on volumes, prices and payment dates, where the customer is willing
- Notice periods and what each side owes the other
- Reviewing exposure through credit limits or advances for new orders
- Knowing more than one person at the customer's end
- Taking legal advice before signing or changing a contract
Contract wording is a matter for a lawyer. The session helps you decide what to ask for.
Early Warning SignsWhat to watch each month.5
Participants add two or three early-warning signs to their weekly money hour, so that a warning is noticed while there is still time to act.
- Orders getting smaller or less regular
- Payments slipping later each month
- Requests for longer terms or lower prices
- News about the customer's own business
- A new supplier appearing alongside you
What participants leave with
- Their own customer concentration table
- A stress test of their cash if the largest customer leaves or pays late
- A short list of what the dependence costs them now
- Two or three steps to widen the base, with a first date
- A list of early-warning signs to monitor
What this session is not
- Advice to drop a major customer
- A fixed percentage above which concentration is unsafe
- Legal advice on contracts or notices
- A sales training course, though sales is touched on
Who teaches it
- Finance practitioners and chartered accountants who work with small businesses
- Owners who have lived through losing a major customer
- Sales and account managers who handle key customers
How the session runs
Two hours, in a small group. The practitioner explains the idea with a labelled, made-up example, then each participant builds a customer table from their own records and runs the stress test. Owners who do not have records handy can work from memory and refine later. The session gives general education and does not replace individual accounting, tax or legal advice.
What your students leave with
- A customer concentration table built from their own sales records
- A clear measure of how much income comes from their top few customers
- A simple stress test: what happens to cash if the largest customer leaves or pays late
- A list of what the dependence costs today, in price, terms and flexibility
- Two or three practical steps to widen the customer base, matched to their business
- Early-warning signs to watch for with a key customer
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
Know how much rests on how few, and widen the base before you are forced to.
Tell us who your students are and what stage they are at. Sessions are free for participants.