Don’t rebuild around the customer who nearly broke you.
A returning major customer can restore sales while rebuilding the same risk. Decide how much exposure the business can carry before committing its capacity.
Corporate Recovery Partners
01 / 06
The old customer offers to fill the calendar
A small transport operator survives after its largest customer pays months late. The customer now proposes enough work to keep every vehicle busy again. The offer is attractive, but accepting it would leave little room for other clients and recreate a large unpaid balance. The owner needs to compare dependable profit with concentration risk.
Calculate how much capacity, unpaid work and cash would be tied to the customer. Include specialised equipment or staffing that cannot easily move to another job. A customer providing a moderate share of revenue may still dominate the business’s working capital.
Review the previous failure honestly. Was the damage caused by late payment, thin margins, unapproved changes or a combination? Each cause needs a specific response.
Business.gov.au identifies credit limits as a way to manage the risk of offering payment terms. Decide an account exposure the business can fund, including work already performed but not yet invoiced. Keep that separate from the maximum value of a single order.
Agree terms and review points before allocating capacity. A limit is useful only if the team can see when it has been reached.
Maintain relationships with other customers and protect enough capacity to serve them. Compare the cost of saying no to some volume with the cost of losing flexibility again. Do not assume replacement customers will appear instantly if the major account slows.
Test whether a specialised purchase would remain useful outside this relationship. Have long commitments reviewed before tying them to a short or uncertain customer promise.
Track payment performance, job contribution and the time spent resolving issues. A large account can look efficient while consuming management hours and finance costs elsewhere.
When a warning appears, review it under the agreed process. Avoid changing existing contractual obligations without advice, but do not let an attractive next order prevent a timely decision about further exposure.
