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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Customer concentration

When does customer concentration stop being a fact and start being a credit issue?

ONE OF 80 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Customer concentration is the share of revenue a business draws from its largest customers. It becomes a credit issue at the point where the borrower's capacity to service debt depends on a relationship the borrower does not control — and the tell is not the percentage but the terms: how the contract can be ended, how much notice it requires, and whether the assets funded against that revenue have any other use. A business can be one relationship with operations attached, and lending to it is a different proposition from lending to a diversified book of the same size.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// IN THE BOOK

Developed in chapter 5, Reading the Industry, Not Just the Borrower.

// WORKED IN

// NEXT TO IT

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