There is a very important business saying “don’t put all your eggs in one basket.” The meaning of this axiom is, do not stop when you have one customer, keep going and land new accounts. To put it another way, if you only have one good customer and something happens to that relationship – they stop buying from you, it puts your entire business in jeopardy.
From a receivable factoring standpoint, or any debt financing in general, the word to describe this is called “concentration.” Having too much concentration of revenue with any single account debtor is seen as a negative to lenders. This is because the possibility of losing that customer would cause the borrowing client to not have the ability to make good on their loan obligations.
With invoice factoring the risk is slightly different, if the relationship goes bad, and a significant outstanding invoices that are not being paid, then there are no other transactions on the books to help offset the non-payment of invoices. Many factoring companies will not even entertain a borrowing client with heavy concentration on their A/R aging.
It is important to remember to keep selling and have multiple sources of revenue coming from many customers – this is a way to attract working capital for your business.