Is this customer creditworthy? Do they pay on time? Is their sector healthy? Reasonable questions and in a stable environment, sufficient. This is not a stable environment. Consumer defaults are at their highest since 2009 while business defaults sit flat, which means stress is currently in transit: it has left the household sector and hasn't yet arrived in trade credit. When it arrives, it will arrive through relationships that one-level-deep assessment scored as safe.

​

The Exposure Ladder is a three-rung method for finding out where you're actually standing.

​

Rung One Direct exposure: who pays you?

​

Take your top 20 revenue relationships. For each, score how consumer-dependent that customer's own revenue is.

​

Score 1 (low): government, utilities, regulated services, long-contract B2B,  revenue survives a household squeeze largely intact. 

 

Score 2 (medium): mixed books, B2B firms with some consumer-facing clients, semi-essential goods and services. 

 

Score 3 (high): retail, hospitality, leisure, consumer discretionary,  revenue moves with household spending, quickly.

​

​

​

​

​

Rung Two Inherited exposure: who pays them?

​

Now ask, for each customer: who are their biggest customers? A customer with low direct consumer exposure but a concentrated consumer-facing client base carries their clients' risk and passes it to you through slower payment and shrinking orders. The marketing agency billing restaurant groups. The wholesaler supplying independent retailers. Each scores 1 on Rung one and 3 on Rung two.

​

Score it the same way:

1 if their customer base is insulated,  2 if mixed, and 3 if concentrated in consumer-facing sectors.

 

You won't have perfect information, their website, their case studies and one honest conversation will get you close enough. An estimate beats a blank.

​

Rung Three  Structural exposure: what breaks their model?

The third rung ignores who pays them and asks what stress does to how they operate. 

 

Refinancing risk: significant debt maturing in the next 12 months means refinancing into rates that are staying put. 

 

Cost sensitivity: labour-heavy models still absorbing employment cost increases with limited pricing power. 

 

Discretionary supplier status: if what you sell them is the first thing cut in their own cost review, your revenue is their easiest saving.

​

Score 1 to 3 as before. This rung catches the customer who looks safe on both revenue tests but is structurally brittle the one that surprises everyone.

​

​

​

​

​

Reading the scores

Add the three rungs.

Each relationship now carries a score from 3 to 9.

​

3–4: Core. Standard terms, annual review. These relationships fund your flexibility elsewhere. 

5–6: Watch. No panic,  but monthly payment-behaviour monitoring. Slippage of even a week in average payment time is your tripwire. 

 

7–9: Act. Tighter terms on new work, deposits or staged invoicing, credit limit reviewed, and a genuine conversation about their pipeline. Not because they're bad customers, because you're currently their cheapest source of credit, and that's not a service you agreed to provide.

​

​

                 "Risk you've mapped and price is Business. Risk you haven't is hope."

 

​

The trap to avoid 

Don't let the ladder make you brutal. A 7+ score is a signal to restructure how you extend credit, not an instruction to exit the relationship. Some of your highest-scoring customers will also be your highest-margin ones, the ladder's job is to make sure you're being paid for that risk: in terms, in deposits, or in price.

​

​

​

​

 

 

 

 

 

 

​

​

​

​

​

​

​