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Accounts Payable & Receivable › Credit Control

How do you manage credit risk for a concentrated customer base?

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Answer

When few customers drive most revenue, monitor them intensively: tighter limits relative to exposure, frequent financial reviews, credit insurance or security on large balances, early-warning indicators, and contingency plans. Diversification of the customer base reduces the systemic risk that one failure imperils the company.
Real-world example With 60% of sales from three customers, the company insures those receivables and reviews their financials quarterly.

Common follow-ups: Why is customer concentration risky? | How can credit insurance help here?

Collections & Bad Debts Aging Analysis Credit Control
All 22 Credit Control questions