Why it worries a lender
Concentration means the failure or departure of one counterparty removes a large share of your income at once. A facility sized on total turnover then becomes unsupportable overnight. Lenders are not judging the customer relationship, they are pricing the consequence of losing it.
The same logic applies to supplier concentration and to geographic concentration, though customer exposure is the one that appears in almost every credit paper.
Concentration caps in receivables finance
Invoice financiers apply a cap, commonly between twenty and forty per cent, on how much of the funded ledger any single debtor may represent. Invoices above the cap sit outside the borrowing base, so your available funding is lower than the ledger total suggests.
Caps can be lifted where the debtor is an exceptionally strong name, where credit insurance covers the exposure, or where a specific debtor limit is negotiated with supporting information about the relationship.
What strengthens your position
Length and stability of the relationship, a written contract with notice provisions, a clean payment record over several years and evidence that the customer depends on you as much as you depend on them all reduce the perceived risk.
Credit insurance is the most direct remedy. It converts the exposure into an insured receivable and frequently unlocks both a higher advance rate and a higher cap.
Structuring around it
Where the cap bites, layer facilities rather than fighting one lender. A selective invoice facility can fund the concentrated debtor while a whole turnover line covers the remaining ledger, or a supply chain programme run by that customer can fund those invoices at their credit standing instead of yours.
Over the longer term, the answer is dilution through new business. Present a credible pipeline showing concentration falling, and lenders will often fund on the trajectory rather than the current snapshot.
Frequently asked questions
What level of concentration is acceptable?
Below twenty per cent rarely draws comment. Above forty per cent it becomes the central credit question in almost every submission.
Does credit insurance solve it?
Largely, for insolvency risk. It does not cover a customer choosing to leave, which lenders still consider.
Can I still get funded with one dominant customer?
Yes, frequently, through selective invoice finance or supply chain finance run by that customer.
Last reviewed: 2026-09-01