Most Indian B2B portfolios have one or two accounts that carry outsized revenue and outstanding exposure. That concentration can feel acceptable when payments are smooth. It becomes dangerous when underlying financial stress starts building and nobody is measuring it formally.
What Concentration Risk Means in Practice
Concentration risk is simple: too much of your receivables depends on too few customers. When one of those names weakens, the impact is no longer a customer-level issue; it becomes a balance-sheet issue.
If your top customer represents a large share of outstanding and their financial health deteriorates, your working-capital position can tighten before internal payment metrics provide a clear warning.
Start with Exposure Concentration
Thresholds are indicative. Calibrate by industry, margin profile, and internal risk appetite.
Exposure percentage alone is not enough. A 25% exposure to a strong customer may be manageable; a 25% exposure to a weakening customer is high-risk.
Three Signals to Track for Concentration Accounts
For each concentration account, monitor three external signals in addition to internal payment behavior:
- AP Days trend from MCA filings (is the customer stretching vendor payments?)
- Financial ratio trend (liquidity, leverage, operating cash generation)
- Legal stress markers (DRT/NCLT and related proceedings)
AP Days is public, repeatable, and highly predictive for supplier-side risk. Most teams skip it because the data lives outside ERP, not because it is hard to compute.
AP Days Workflow from Public MCA Data
Download the latest two to three annual filings for the customer from MCA.
Extract COGS (or closest operational cost denominator consistently available).
Compute AP Days = (Trade Payables / COGS) * 365 and compare year-over-year.
Treat sustained AP Days expansion as an early supplier-stress indicator and review terms.
Combine Concentration and Financial Health
Low concentration + strong financials. Maintain standard monitoring.
Low concentration + weak financials. Limit expansion, monitor trends.
High concentration + weak financials. Tighten terms and reduce incremental exposure.
High concentration + active legal stress. Escalate to CFO/legal; pause credit expansion.
Concentration Policy Blueprint
Threshold Policy
Threshold Policy
Define hard ceiling for single-customer outstanding concentration.
Define mandatory quarterly review tier for medium concentration accounts.
Define top-3 combined concentration tolerance for portfolio resilience.
Quarterly Review Triggers
Quarterly Review Triggers
Action Rules
Action Rules
Freeze limit expansion when deterioration thresholds are breached.
Escalate high-severity accounts through predefined approval workflow.
Example: Concentration Without Monitoring
A supplier has Rs 12 crore total outstanding, with one listed customer at Rs 4.2 crore (35% concentration). Payment behavior remains stable, so limit extensions continue.
MCA trend shows AP Days rising from 54 to 71 to 92, while leverage deteriorates and a creditor case appears in public records.
By the time internal DPD starts slipping, exposure has already grown materially. The issue was not lack of data; it was lack of concentration-governance discipline.
Concentration Monitoring with Unified External + Internal Signals
Privue links receivables concentration, financial-ratio trend, legal records, and payment behavior in one customer view. Teams can define threshold-based escalation policies and get alerts when concentration accounts move into risk zones.
What You Should Do Next
Compute top-customer and top-3 concentration from current outstanding this week.
Run AP Days trend for all concentration accounts using last 2–3 MCA filings.
Check DRT/NCLT records for those same accounts before next limit discussion.
Publish a one-page concentration policy with clear thresholds and named ownership.