By Andrew Athineos, Managing Director, Athena Collections®
Myths vs Reality
Commercial truths every business owner needs to hear.
The Myth
“They’re a huge company, there’s no way they won’t pay. They’re too big to fail.”
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Why People Believe It
Scale feels like safety. A large, well-known company seems inherently more stable than a small one, simply by virtue of its size and visibility.
Household names carry an assumption of permanence, built up over years of familiarity and media presence.
It’s genuinely rare to hear about a major company collapsing, so the mental shortcut of “big equals safe” is reinforced by how infrequently the alternative makes headlines.
Trusting a large customer’s stability also removes the discomfort of scrutinising a business relationship that looks, on paper, entirely secure.
The Reality
Carillion. Wilko. Thomas Cook. Debenhams. Britishvolt. Every one of these was a large, established, well-known business right up until it wasn’t.
Company size affects how a business fails, not whether it can. Large businesses often collapse suddenly and publicly, after long periods where suppliers assumed everything was fine.
Large companies also tend to have more complex creditor structures. When they do fail, smaller unsecured creditors, which is where most trade suppliers sit, are typically a long way down the list for repayment.
“Too big to fail” isn’t a commercial assessment. It’s a feeling, based on visibility and reputation, not on the company’s actual financial position, which is very rarely visible to a supplier.
The Commercial Impact
Businesses that extend the most generous credit terms to their largest customers, precisely because they seem safest, often carry the most exposure to a single counterparty without realising it.
Complacency about a large customer’s stability tends to reduce the frequency of credit checks and account reviews that would normally apply to a smaller, less familiar customer.
When a large customer does fail, the scale of the loss is usually proportionate to how much trust, and how much unsecured credit, was extended on the basis of its size alone.
Case Study
A supplier extended increasingly generous payment terms to a major, nationally recognised customer over several years, reasoning that a company of that size and profile was effectively risk free. No credit checks were run after the first year of trading. When the customer entered administration, the supplier discovered they were one of several hundred unsecured trade creditors, with recovery expected to be a small fraction of the amount owed.
Andrew’s Verdict
The businesses I’ve seen hit hardest by an insolvency are rarely the ones dealing with unfamiliar, higher risk customers. They’re the ones dealing with a large, recognisable name they stopped scrutinising years earlier, because the size of the logo did the reassuring for them.
The Bottom Line
Size is not the same as financial health. A large, well-known company deserves the same basic credit discipline as any other customer: regular checks, sensible terms and attention to any change in payment pattern.
The name on the invoice doesn’t guarantee the money behind it.
Ask yourself: when did you last actually check the financial position of your largest customer, rather than assuming their size speaks for itself?
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