Meaning and transaction use
The first source provides an institutional framework relevant to working capital. This page applies that framework to debtor concentration without treating the source as a universal contractual definition. [S1]
The second source supplies additional transaction or disclosure context. Its examples remain source-specific and require reconciliation to the actual facts and governing documents. [S2]
Proposed review method: record how debtor concentration is defined in working-capital borrowing, working-capital lending; identify the owner, source inputs, decision rule, approval, dependencies and monitoring evidence; then reconcile the same definition across the model, committee paper and transaction documents.
Worked example
Illustrative debtor concentration review calculation only. All figures are hypothetical.
Scroll the table horizontally to view all columns.
| Measure | Calculation | Result |
|---|---|---|
| Inventory | Given | 40.0m |
| Receivables | Given | 30.0m |
| Payables | Given | 25.0m |
| Net working capital | 40.0 + 30.0 - 25.0 | 45.0m |
The illustrative net working-capital balance is 45.0m.
Proposed transaction review process
Define the decision
State the decision involving debtor concentration, the relevant contexts and the required approval.
Reconcile evidence
Tie every material input to a dated source, owner and definition.
Test scenarios
Run the base case and the relevant downside, timing and counterparty cases.
Document and monitor
Reflect the approved position in the transaction record and monitor conditions through execution.
Evidence checklist
Governing documents
Executed or proposed terms that define debtor concentration, including amendments and schedules.
Financial evidence
Reconciled historical data, forecast inputs, calculations and sensitivity outputs.
Diligence record
Source documents, specialist advice, open issues and responsible owners.
Decision record
Options considered, approval, conditions, implementation steps and monitoring dates.
Decision framework
| Situation | Proposed action |
|---|---|
| Definitions differ | Reconcile the model, committee paper and governing documents before approval. |
| Evidence is incomplete | Hold the conclusion and request the missing source record. |
| The downside case fails | Resize, restructure, mitigate or decline the proposed position. |
| Terms or facts change | Refresh the analysis, approvals and execution record. |
Common errors to check
- Using an undefined label or inherited assumption as evidence.
- Applying another transaction's percentage, threshold or timetable without support.
- Ignoring downside timing, liquidity, counterparty or implementation effects.
- Leaving the approved position inconsistent across models, papers and documents.
Build the debtor concentration decision file
Bring the governing documents, reconciled inputs, assumptions and decision questions to a structured transaction review.
Discuss the transactionPrimary references and editorial scope
- CFA Institute: A Look at the Cash Conversion Cycle
Cash-conversion-cycle components and working-capital interpretation. Reference checked 18 September 2026. - BDC: Preparing your finances for an economic slowdown
Liquidity, cash-flow and working-capital preparation. Reference checked 18 September 2026.
General working capital education using public sources. Figures are hypothetical. The actual treatment of debtor concentration depends on the facts, executed documents, jurisdiction and qualified legal, tax, accounting, regulatory or technical advice.
General business information. Obtain advice appropriate to the legal, tax, accounting and financing facts. No offer, lender commitment or transaction outcome is represented. All worked examples use expressly assumed figures. Editorial draft date: 17 September 2026.
