What Is Your Biggest Customer Really Contributing?

Winning the contract felt like your business had finally arrived. A national customer, reliable volume, enough work to justify more equipment, more staff, and a conversation with the bank about growth. Two years later, your revenue is higher, everyone is working harder, and cash is tighter than before you won the contract. You think you need a bigger working capital facility? You might.

But first, you need to know what you are actually earning from your biggest customer. Consider a transport operator. These are illustrative numbers, not a client. Your largest customer generates six million dollars a year. The contract report shows six hundred thousand dollars left after operating costs.

But the service has changed. More deliveries, longer waiting times, overtime, equipment held available for work that does not always arrive. Suppose four hundred thousand dollars of those costs sit elsewhere in the accounts. Your contribution is now two hundred thousand before central overheads and financing. The customer still contributes, but there is much less room for error.

Then there is the cash. At five hundred thousand dollars of sales a month, moving from thirty to sixty days to collect payment ties up roughly another half a million dollars. That assumes steady sales and excludes GST. It is money you have to fund. At an illustrative twelve percent borrowing rate, that extra funding costs sixty thousand dollars a year.

Your customer can pay within the agreed terms and still leave you financing the relationship. Walking away may make things worse. Equipment finance and depot leases do not disappear with the customer. You need to know which costs you can actually remove and which benefits you would lose. The useful question is, what needs to change?

It might be price, service requirements, payment terms, or your own operating model. And whatever you agree, the transition needs to be funded. If your revenue is growing, but cash keeps getting tighter, it is worth taking a closer look at your largest customer. At Rebound Advisory, we help you understand what that relationship actually earns, what would need to change, and how to fund the transition. If this sounds familiar, get in touch with me.

Let's talk about what your biggest customer is contributing and what it is costing you.