Being too dependent on one customer puts your business at risk. If they experience difficulties, your cash flow will be affected with a knock on effect of putting pressure on your regular outgoings for overheads, staff and stock.
Your Actionfeed will highlight customer dependency for you if something has changed and you need to be alerted to it, but to get a real understanding you’ll find a customer dependency ranking % in Flow In.
By clicking on any customer name you’ll get the dependency detail over the last 90 days and how this trend is tracking.
What to do if you are too dependent?
Start looking at your customer base. You need to diversify and increase your sales pipeline to ensure you protect yourself. It’s not a quick task, but it is essential. It gives you an opportunity to experiment with prices, credit terms and how you serve your customers generally.
Does supplier dependency matter?
Yes. If your supply chain is dependent on one supplier they have the potential to cause issues in multiple ways:
If their business fails you are totally exposed and may have to deal with long lead times for your goods, impacting customer delivery and cash coming in from customers.
If they put their prices up you are also impacted in a far greater way than if you’ve spread your supplier risk. You also have more bargaining power between suppliers if you have more than a handful.