MANY small companies putting their survival on the line by relying on just one customer for the majority of their business.

In the region, an estimated 10,000 small firms receive more than 75% of their turnover from a single client, according to a study.

Close Invoice Finance based its statistics on interviews with more than 500 owner/managers. It warned that such heavy reliance on one source of income put businesses at serious risk if their client fell into financial difficulties and defaulted on its debt.

David Thomson, chief executive of Close Invoice Finance, said: “Simply, this means one company’s financial downfall can mean bad debt has a domino effect and will precipitate another business’ collapse.”

The poll also found that more than three in five were not insured against clients defaulting on their payments.

The domino effect of bad debt is highlighted by the latest figures from the Insolvency Service, which showed that 4,607 companies went into compulsory liquidation or creditors’ voluntary liquidation during the fourth quarter of 2008 in England and Wales.

The figure is almost 12% higher than the previous three months and shows a 51.6% increase on the same period a year ago.