Customer Concentration Calculator · HHI Index

Calculate customer concentration

Enter the total annual revenue and the revenue of each main client to get the concentration index and the associated risk.

Total Annual Revenue (€)

Sector

Main client (required)

Client 1 name

Client 1 revenue (€)

Client 2 name

Client 2 revenue (€)

Client 3 name

Client 3 revenue (€)

Client 4 name

Client 4 revenue (€)

Client 5 name

Client 5 revenue (€)

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Main Client

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of total revenue

HHI Index

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Capital at Risk

—

if client 1 leaves

Remaining Revenue

—

after losing client 1

Revenue distribution by client

Note: With factoring, you can advance the value of this client's invoices in 24-48h regardless of when they pay, eliminating the liquidity risk of concentration.

What is customer concentration?

Customer concentration is the degree to which a company's revenue depends on a small number of buyers. A company with 80% of its revenue in a single client has very high concentration, and a proportionally high treasury risk.

The problem is not just losing the client. It is the daily risk: if that client delays a payment, cuts an order or runs into financial trouble, the company is dragged down immediately. In Portugal, where average payment terms exceed 60 days, customer concentration is one of the main drivers of SME insolvency.

Simplified HHI index (customer concentration) HHI = Σ (% of each client)² ÷ 100

Example: Client A = 60%, Client B = 30%, Others = 10%
HHI = (60² + 30² + 10²) ÷ 100 = (3600 + 900 + 100) ÷ 100 = 46 — HIGH

The higher the HHI, the greater the concentration and the risk. An HHI of 100 means total dependence on a single client. An HHI below 25 indicates a well-diversified portfolio.

Concentration risk scale

Interpreting the concentration index and the weight of the main client in total revenue:

HHI < 25CONTROLLED
Good diversification

HHI 25–50MODERATE / HIGH
Rising risk

HHI > 50CRITICAL
High dependence

Client 1 weight	Rating	Risk	Recommended action
< 25%	CONTROLLED	Low	Monitor annually
25%–40%	MODERATE	Medium	Diversify actively, use factoring
40%–60%	HIGH	High	Urgent diversification plan + factoring
> 60%	CRITICAL	Very high	Immediate action: factoring + diversification

How to manage concentration risk

There are two fronts for managing customer concentration: reducing concentration over the long term and protecting treasury in the short term.

Factoring on the concentrated client

Advance the main client's invoices in 24-48h. Even if the company depends on a single client, it does not depend on the timing of their payments. Cash flow stays protected.

Learn more about factoring →

Active diversification

Set a maximum concentration cap per client (e.g. 30%) and invest in sales prospecting for other segments or geographies. Diversification is a medium-term process.

Full financial diagnosis →

DSO monitoring per client

Track the average collection period specifically for the concentrated client. A rise in that client's DSO is the first sign of risk, before any payment failure.

Calculate DSO →

Frequently asked questions

What is customer concentration and why is it a risk?

Customer concentration measures how dependent a company is on a small number of buyers. When a single client accounts for more than 30-40% of revenue, the company is exposed to serious liquidity risk: any payment delay, drop in orders or supplier switch by that client can trigger an immediate treasury crisis. The impact is even greater if that client has late-payment practices.

What is the HHI Index and how is it interpreted?

The HHI (Herfindahl-Hirschman Index) is an economic concentration indicator adapted to client-portfolio analysis. It is calculated by summing the squares of each client's revenue percentages, divided by 100. Scale: below 25 indicates good diversification (CONTROLLED), between 25 and 50 indicates moderate to high risk, above 50 indicates high concentration (CRITICAL). An HHI of 100 means total dependence on a single client.

What should you do if a single client accounts for more than 50% of revenue?

This is a high-risk situation that requires action on two fronts: (1) Diversifying the client base — invest in sales prospecting, expand geographies or segments, and avoid exclusivity contracts that prevent working with other clients; (2) Immediate treasury protection — use factoring to advance the value of that client's invoices in 24-48 hours, eliminating the liquidity risk tied to payment timing. While diversification is a medium-term process, factoring is an immediate protection solution.

How does factoring help manage concentration risk?

Factoring lets you advance the value of invoices issued to a concentrated client in 24-48 hours, regardless of the agreed payment term. This way, even if the company depends on a single large client, it does not depend on the timing of their payments to manage treasury. If the client pays in 90 days, the company gets paid in 2 days via factoring. Concentration risk does not disappear, but liquidity risk is protected. In non-recourse factoring, credit risk is also transferred to the factoring provider.

Protect cash flow from client dependence

With factoring, you advance the concentrated client's invoices in 24-48h and protect treasury, regardless of when the client pays. Concentration risk stops being liquidity risk.

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