Banker Brief
- Lender angle
- Help lenders support borrower growth while keeping customer concentration tied to a clear collateral and liquidity review.
- Credit issue
- One customer may represent enough receivables to affect credit comfort, lender eligibility, or cash-flow planning.
- Why it matters
- The borrower may need that customer to keep growing, so the answer should be structure rather than a reflexive no.
Key Takeaways
- Customer concentration often appears because the borrower won meaningful work.
- The issue becomes practical when concentration limits availability or creates discomfort around open terms.
- A focused review can turn a broad concern into a specific path.
Why this matters to lenders
A large customer relationship may be exactly what the borrower wanted. The lender does not need to treat concentration as failure. The question is whether the receivable structure is strong enough to support the size of the relationship.
The question is exposure, not alarm
If one debtor drives a large share of eligible AR, the lender is indirectly watching that debtor too. A practical review asks what happens to liquidity and availability if that customer slows payment, disputes invoices, crosses a cap, or files.
The takeaway
Concentration can be managed when the borrower and lender understand the peak balance, payment behavior, eligibility treatment, and available risk-transfer options. The review should preserve good growth while making the collateral question explicit.
What to Review With the Borrower
- Top-customer share of AR and expected peak balances.
- Whether concentration caps or eligibility rules constrain availability.
- Whether payment history, disputes, or pending shipments change the exposure.
- Whether customer limits are documented, monitored, or insured.
- Whether terms, coverage, or a concentration plan would support the credit.
Source Notes
Borrowing-base customer concentration review; TCIA receivables assessment framework