THE BARATELLI INSTITUTE · Mentoring at Scale
FOR B2B OPERATORS · EQUIPMENT DEALERS · SOLAR INSTALLERS · CONTRACTORS · SURVEY FIRMS · CATERERS · ANY OPERATOR WITH RECEIVABLES

If your top customer paid 60 days late, would you make payroll?

Customer concentration is the most under-modeled risk in B2B operations. Most operators run AR aging once a month, look at the worst column, and call it done. This tool puts the concentration risk on the same page as the aging waterfall, the DSO trend, and the CECL-aligned bad-debt reserve — then stress-tests the cash gap if your largest customer slips.

Concentration
Herfindahl index
AR aging
bucket waterfall
DSO
vs benchmark
Cash gap
stress test
YOUR RECEIVABLES
1
Business basics
2
Top 5 customers
3
AR aging buckets
4
Terms & bad debt
5
Results & recommendations
STAGE 1 OF 5

Business basics

Defaults are typical for a mid-size B2B operator: $25M annual revenue, $4.5M AR balance, ~65 day DSO.

Drives benchmark DSO and concentration norms.
Total B2B revenue subject to invoicing/collection terms (exclude cash sales).
$
Current accounts receivable balance from your A/R aging report.
$
Cash + undrawn line of credit. The shock-absorber for late payment.
$
Recurring monthly outflow: payroll, rent, insurance, debt service. The bare minimum to keep the doors open.
$
The pyramid risk B2B operators ignore. A general contractor pays you when the owner pays them. The owner pays the GC when the bank releases the draw. The bank releases the draw when the inspection signs off. Any link in that chain can slip 30-60 days — and when it does, you finance the delay out of your own cash. Most operators don't see this risk until they're already in it.
STAGE 2 OF 5

Top 5 customers — concentration is the killer

List your top 5 customers with their share of annual revenue and their share of current AR. A customer holding 25% of revenue is a strategic asset. The same customer holding 35% of AR is a liquidity risk.

Customer #1 name
% of revenue
%
% of AR
%
Pay days (avg)
Customer #2 name
% of revenue
%
% of AR
%
Pay days (avg)
Customer #3 name
% of revenue
%
% of AR
%
Pay days (avg)
Customer #4 name
% of revenue
%
% of AR
%
Pay days (avg)
Customer #5 name
% of revenue
%
% of AR
%
Pay days (avg)
STAGE 3 OF 5

AR aging buckets — the waterfall that reveals all

Enter dollars in each aging bucket. The shape of the waterfall tells you more about collections discipline than any DSO number.

Within terms. Healthy waterfall: 60-75% of AR here.
$
Recently late. Often timing/admin issues. Healthy: 10-15% of AR.
$
Genuine collections issue. Healthy: 5-10% of AR.
$
Escalation territory. Warning if >5% of AR.
$
Increasingly likely bad debt. Healthy: under 2%.
$
Most operators write these off or send to collections. Hidden cost: collection fees, customer relationship.
$
The bucket math — collection probability by age. Industry-norm collection probability by age bucket: Current: 99%. 1-30: 95%. 31-60: 85%. 61-90: 70%. 91-120: 50%. 120+: 25%. These probabilities drive the bad-debt reserve calculation. Your actual collection rates may vary; use 24-36 month rolling data if you have it.
STAGE 4 OF 5

Terms & bad debt history

Final inputs for the reserve calculation and the concentration stress test.

Your default invoice terms. Net 30 is industry-norm; Net 45-60 is common in construction.
The largest concession you've made — often to your biggest customer.
Trailing 24-36 month average. Industrial B2B: 0.2-0.8%. Solar: 0.5-1.5%. Construction subs: 0.8-2.0%.
%
Count of accounts with balances in 61+ bucket. Indicator of collection discipline.
Reserve on the balance sheet now. Under ASC 326 CECL, this should reflect lifetime expected credit losses, not just historical.
$
Coface, Atradius, Euler Hermes coverage on top customers. Premiums typically 0.15-0.40% of insured receivables.
STAGE 5 OF 5

Results & recommendations

Concentration risk, AR aging waterfall, DSO, CECL reserve, and the cash-gap stress test on one page.

HERE, TRY THESE. THEY MAY HELP.

Three honest links — no forms, no email capture.

The AR math is the easy part. The harder part is the operating discipline: credit application standards, progress billing structure, lien rights and notices, factoring vs LOC economics, and the credit-insurance procurement playbook. The guides walk through it.

CFO & Controller's Guide Business Operators Blueprint All free tools
Practitioner reference. Outputs are estimates based on user inputs. Bad-debt reserve methodology under ASC 326 CECL (Current Expected Credit Loss) requires entity-specific judgment about historical loss data, current conditions, and reasonable supportable forecasts. Trade-credit insurance, factoring, and ABL terms vary by carrier and jurisdiction. Lien rights and mechanic's lien notice deadlines are state-specific. This is not financial, tax, legal, accounting, or insurance advice. Consult your CPA, controller, attorney, and licensed insurance broker before making changes.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator pairs with CFO & Controller's Guide and Business Operators Blueprint.
The tool gives you the AR risk math. The guides give you the surrounding discipline — ASC 326 CECL methodology, lender-covenant analysis, factoring/ABL pricing, credit-application standards, progress-billing design, lien-rights playbook, and the credit-insurance procurement model. Three honest links. Here, try these. They may help.
CFO & Controller's Guide → Business Operators Blueprint → All free tools
PROFESSIONAL DISCLAIMER · PLEASE READ

Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute investment, tax, legal, accounting, insurance, or any other professional advice.

Estimates based on your inputs. All results are estimates derived from the data and assumptions you provide. Bad-debt reserve methodology under ASC 326 CECL requires entity-specific judgment about historical loss data, current conditions, and reasonable supportable forecasts. Trade-credit insurance underwriting, factoring terms, asset-based lending advance rates, and mechanic's lien rights vary by carrier, state, and project type. The Baratelli Institute, its affiliates, and any co-branding professional make no warranty of accuracy, completeness, currency, or fitness for any particular purpose, and disclaim all liability for decisions made in reliance on the output.

Consult your own qualified professionals. Before booking any reserve change, factoring engagement, lien filing, or insurance procurement, consult your CPA, controller, external auditor, attorney, and licensed commercial-insurance broker. The Baratelli Institute is a publisher of practitioner reference material. It is not a registered investment adviser, broker-dealer, law firm, accounting firm, insurance agency, or lender.

Co-branded versions: If a professional advisor's name and contact information appear on this tool, that advisor has elected to make the tool available to clients as a courtesy.