Reduce dependence on a slow-paying customer without guessing at replacement sales

The account is valuable and difficult to fund

Imagine your biggest customer pays late so often that you want to reduce the amount of new work you accept from it. Other enquiries look promising. It is tempting to assume they will immediately replace both the sales and cash from the existing account.

Plan the transition rather than treating possible sales as a ready substitute. New work can bring its own quoting, mobilisation and collection period before money becomes available.

Separate committed work from future choices

Identify jobs already agreed, tenders still open and enquiries not yet accepted. Check the obligations on current work before changing delivery or supply. A decision about future customer mix is not automatic authority to abandon an existing contract.

Keep collection of the old debt visible separately. Reducing new exposure does not remove the need to resolve invoices for completed work.

Map when replacement work could produce cash

Estimate the time needed to win, prepare, perform and bill the new work. Show uncertain enquiries separately from confirmed contracts. Include the costs required before the first customer receipt.

business.gov.au explains that credit sales carry cash-flow risk. A new customer paying later may replace turnover without solving the funding problem that prompted the change.

Source: business.gov.au: Payment terms

Check the capacity you are reallocating

Identify the crew, equipment and management time that would move between customers. Assess whether the replacement work uses those resources when they become available, rather than assuming every enquiry fits the same gap.

Avoid promising more work than the team can deliver simply to reduce reliance on one account. Keep quality, existing commitments and the cost of changing the workload in the decision.

Set a practical review point

Choose a period or order decision at which to review the transition. Compare accepted new work, actual receipts and remaining exposure to the slow payer. Revise assumptions when the replacement pipeline develops differently from expectations.

Discuss new terms with the existing customer where appropriate. A controlled reduction or a better payment arrangement may be more workable than an abrupt change based on frustration.

Bring both sides of the decision to advice

Show your adviser the overdue account, current commitments and realistic replacement schedule. If the business cannot meet debts while the transition occurs, seek prompt advice about the whole position.

CRP can discuss the unpaid account through Report a Debt and the resulting business pressure through the contact form. Keep the two questions clear: recovering money already owed and deciding how much future exposure the business can afford.