Client Concentration and Receipt Timing

Client concentration can be measured in revenue, receivables, or expected cash receipts. Each denominator answers a different question. A customer responsible for a modest share of this month's earned revenue may still supply most of the cash expected from older invoices. For near-term cash planning, begin with the receipts that must arrive during the period, then identify which customer controls them.

Measure the receipt base

Assume a hypothetical month expects $50,000 of customer receipts. Client A supplies $20,000, B supplies $10,000, C supplies $8,000, and other clients supply $12,000. A represents 40% of expected receipts, and A plus B represent 60%. The three named clients together represent 76%. These are concentration measures for this receipt schedule, not industry risk thresholds.

Suppose A also represents $15,000 of $60,000 earned revenue this month, or 25%. The 25% revenue share and 40% receipt share can both be correct because collections include invoices from different periods. Do not replace one with the other when deciding whether a particular payment week is supported.

Stress the customer's receipt as a connected amount

With $12,000 opening cash, $50,000 receipts, and $55,000 payments, base closing cash is $7,000. If all $20,000 from A moves beyond the period while payments remain due, projected closing cash becomes −$13,000. If only half of A's receipt is delayed, closing cash becomes −$3,000. Preserve these negative balances as unresolved gaps.

Five separate $4,000 invoices to A do not create five independent customer payment sources. One approval issue, dispute, or payment run could affect them together. Group invoices by the actual customer or paying entity and examine the shared conditions behind their expected dates. Conversely, do not assume two unrelated clients will delay together without a stated reason.

Distinguish delay from permanent loss

A delayed receipt should appear in a later period unless the scenario separately changes the amount expected to be collected. A lost customer can also change future delivery costs and capacity; that is a different scenario from a late payment for work already completed. Existing payroll and committed supplier payments may not fall when one receipt slips.

Use invoices, payment promises, acceptance status, and settlement history to review the sensitive dates. A high concentration figure alone does not establish that a customer will pay late or that the relationship should end. Zero total expected receipts makes the percentage undefined, even if a cash deficit is clear in dollars. The measure identifies dependence within a forecast; it does not assess creditworthiness, prescribe a customer mix, or promise that adding clients will eliminate cash risk.

Method references: OpenStax: Prepare Financial Budgets. Accessed October 22, 2026. All dollar figures are hypothetical worked examples.