Let’s start the year off with a true story. One of our biggest clients currently owes us $40,000, which is the latest and past-due installment for our installation of multiple commercial condensing boilers. The heating system also includes massive air-to-water heat pumps.

Those heat pumps are outside our scope of work and were installed by a different contractor, one the client hired. Our boilers were commissioned and have been making hot water for over a year, but the heat pumps still aren’t operational. Unfortunately, per the client’s bank, funds for the heating system can’t be distributed until the entire system is operational. We need that money for payroll and parts.

I’ve had multiple conversations with our accountant and attorney about this. As the contract reads, there’s nothing I can do to expedite the payment process. One of my colleagues mentioned taking the client to court, but there are two problems with that approach: first, the cost isn’t worth it. Second, I firmly believe that litigation should always be the last resort. 

So, my small business is left with the challenge of making ends meet until that paycheck arrives. Luckily, our cash flow is diversified enough that this problem hurts, but it’s not a killing blow. It is, however, a stark reminder to do what you can to avoid putting your business in a scenario like the one I currently find myself in.

As business owners, we’re conditioned to chase growth. Bigger projects, bigger contracts, bigger clients — that’s what we want, right? Landing a “whale” (a major account or a large institutional client) often feels like a turning point. It’s validation that we’ve “arrived.” However, as I’m currently learning the hard way, a large client can be both a blessing and a curse.

There’s no denying the appeal: large clients can provide steady work, significant revenue and opportunities to expand your capabilities. If you’re not careful, though, whales can also jeopardize your company’s financial health. In extreme cases, a big-fish-gone-wrong scenario can even sink a business entirely. The key is understanding the risks of serving large accounts and making sure your company is structured to withstand a worst-case scenario.

The most obvious (and most dangerous) pitfall is over-reliance. When one client accounts for the majority of your revenue, you become vulnerable to forces outside your control. Maybe leadership at your client changes and the operations are restructured, without you in that structure. Maybe funding dries up. Maybe its own clients pay late, delaying your payment in turn. 

Maybe they hire in-house plumbing or heating talent or simply go with a different contractor. If too much of your revenue is tied to that one relationship, losing it can leave you scrambling, or worse.

I’ve seen contractors go under almost overnight because a single major client delayed payment by 90 or 120 days. They had payroll to meet, suppliers to pay and commitments to honor, but with all their working capital tied up in one account, they were powerless.

I was in the tech sector before I entered the skilled trades. In that world, small companies were ruined by whales all the time.

The solution is balance. A healthy company portfolio should include a mix of small, medium and large clients. Smaller and mid-sized clients are the unsung heroes of cash flow management. They usually pay faster, require less upfront capital and have less red tape. While a small job might not be as exciting as a big one, a steady flow of smaller projects helps keep the lights on while you wait for that big payment to arrive.

Understand the real cost of large clients

It’s easy to get blinded by revenue projections on a big job, but look deeper at the financial reality. Servicing a major client often requires significant capital outlay. You may need to hire additional staff, purchase specialized equipment or front material costs well before you see a single dollar in return.

Large organizations often have payment cycles of 60, 90 or even 120 days. That might be manageable if they represent 10% of your revenue, but if they represent 70%, those delays can put your entire business in jeopardy.

Worse yet, some large clients use their size as leverage. They know they’re your biggest source of income, and they count on that dependency when negotiating terms. They might stretch payment deadlines, demand additional work before releasing funds or resist change orders. If you’ve put all your eggs in their basket, you have little choice but to comply.

Protect yourself 

The following are a few items out of my big client playbook. Some of these lessons have been in the playbook for years, and some were added much more recently:

1. Never extend unlimited credit just because they’re big.

It’s easy to rationalize continuing work even when payments are late. After all, it’s a big client and a lot more work is coming. However, that’s a dangerous trap. Set clear payment milestones and stop work if they fall behind. No client, no matter how big, is worth jeopardizing your company’s financial health.

2. Read the contract carefully and don’t be afraid to negotiate.

Too many small-business owners treat client contracts as non-negotiable. In reality, most large clients expect some back-and-forth. Pay particular attention to payment terms, retainage, dispute resolution clauses and scope definitions. If something doesn’t work for you, speak up. It’s far better to hash it out before signing than to regret it later.

3. Build and maintain financial resilience.

If you’re taking on a large client, make sure you have the capital reserves to weather delayed payments. Consider negotiating favorable payment schedules with your suppliers or using progress billing to improve cash flow. 

Most importantly, don’t neglect your smaller clients. They provide financial stability to take calculated risks with bigger accounts.

4. Know when to walk away.

It’s counterintuitive, but sometimes the best decision you can make is to turn down a large job or even fire a big client. If they’re consistently late on payments, constantly changing terms or putting your business at risk, the revenue isn’t worth the risk.

My grandfather used to say, “The best job you never got was the one you walked away from.”

A balanced portfolio is a strong portfolio

There’s nothing wrong with pursuing big clients. In fact, they’re often necessary for growth and credibility. However, they should complement your business, not define it. A company relying solely on one or two massive accounts is walking a tightrope. One delay, one missed payment or one canceled project can trigger a domino effect that’s hard to recover from.

By maintaining a diverse mix of clients — large enough to sustain growth, small enough to keep cash flowing and varied enough to spread your risk — you build a business that’s stable, resilient and prepared for whatever comes your way.

At the end of the day, big clients are like any powerful tool: incredibly valuable when used correctly, but dangerous when handled carelessly. Respect the risks, plan for the worst and never let one client hold the fate of your company in its hands.