When a middle-market company enters a transitional period, the first meetings follow a familiar script. Management explains the liquidity gap. Lenders test collateral and covenant exposure. Owners debate whether to invest more capital. Advisors begin building a restructuring plan.
One stakeholder is usually absent: the customer. Yet the customer decides whether to place the next order, pay the next invoice on time, renew the next contract, or begin qualifying an alternative supplier. In a concentrated middle-market business, one customercustomer’s decision can change the outcome faster than a revised forecast or a new lender presentation. Without continuing orders and collections, there is no revenue base on which to build a credible restructuring.
That question is more pressing now than in most recent cycles. Tariff policy has shifted repeatedly through 2025 and into 2026, and the resulting inventory dislocations, rerouting costs and procurement disputes have pushed distress down into supplier bases – with Deloitte’s 2026 restructuring outlook identifying industrials among the principal stress concentrations (ABF Journal). Customers, in turn, have spent three years learning to treat supplier reliability as an enterprise risk rather than a procurement detail. They are watching more closely, reacting faster, and qualifying second sources earlier than they did a decade ago. The customer strategy therefore has tomust begin before the distress becomes public, and it turns on three questions: which relationships can stabilize the business, which are most likely to reduce exposure, and what evidence each customer will need before it continues to rely on the company.
The Customer’s PlaceSits Inside the Capital Structure
A historical income statement shows what customers bought yesterday. A restructuring plan depends on what they will buy tomorrow. Backlog quality, renewal timing, payment behavior, contractual rights and switching costs matter more than the revenue concentration percentage alone.
Receivables connect the customer directly to liquidity. Under an asset-based facility, availability is calculated from a borrowing base that includes a percentage of eligible accounts receivable and inventory (FDIC). If a major customer delays payment, disputes invoices, or its accounts receivable becomes ineligible under the facility, the company loses cash collections and borrowing capacity simultaneously. In practical terms, a concentrated customer is potentially an unsecured, uncommitted and undocumented funding line – one that can be withdrawn without notice, without a covenant breach, and without anyone in the capital structure being consulted.
Customers are not capital providers, however, and it is a mistake to treat them as sympathetic ones. Their objective is continuity of supply, service quality and protection from disruption – not the preservation of the existing capital structure. Any support has tomust be built around that mutual economic interest, and it will be priced accordingly.
Map the Relationship Before the Market Does
Build a customer map with the same discipline applied to the debt schedule. Customer dependence is material enough that the SEC requires smaller reporting companies to describe it under Regulation S-K Item 101(h)(4)(vi) – a useful benchmark even for private companies that will never file. For a business in transition the analysis should go further: revenue and gross margin by customer, receivables aging, contract duration, termination and assignment rights, backlog, renewal dates, payment terms, potentila alternative suppliers, sole-source status, the customer’s inventory buffers and delivery cadence, and the time required to qualify an alternative supplier including any tooling or dedicated equipment needed to complete a move.
The map should test dependency in both directions. A customer that can replace the company within two weeks presents a different risk from one whose specifications, tooling, systems or regulatory approvals would take months to replicate. The latter has a stronger incentive to support continuity – and more leverage to demand visibility, safeguards or commercial concessions in exchange for it. Both facts are true at once, and the second is the one management tends to underestimate.
This is where a flat list of top accounts becomes a decision tool. Some relationships must be defended. Some are candidates for support. Others are already reducing orders or developing alternatives, and belong in the downside case rather than the plan.
A restructuring plan must protect the revenue that keeps the business operating. That requires understanding which customers will stay, what they need to maintain confidence, and how disruption could affect future orders. Customer engagement should therefore sit alongside discussions with lenders and other stakeholders throughout the restructuring.
The Single-Source, Just-in-Time Equation
That dependency is most acute in single-source, just-in-time supply chains. In automotive, aerospace, heavy truck and agricultural equipment manufacturing as examples, a supplier may be the only approved source for a component delivered against a tightly sequenced production schedule and have possession of tooling critical to production. With limited buffer inventory, a missed shipment can stop a customer’s assembly line. Replacing the supplier may require the Customer to take possession of existing or construct new tooling, testing, quality approvals or certification, none of which can be completed on the timetable of an immediate liquidity crisis.
The resulting exposure creates an opportunity for the restructuring. An original equipment manufacturer or Tier 1 customer may have more to lose from a production shutdown than from providing targeted support to a viable supplier. It can accelerate payment, fund critical materials or tooling, stabilize order releases, or provide engineering and scheduling assistance. But that support only preserves value if management can connect the funding to specific parts, credible output milestones and deliveries the customer can rely on. Customer involvement is therefore an operating workstream, not simply another financing source.
Single-source dependence also creates risk. A customer may insist on greater visibility into cash, inventory, capacity and work in process; demand control over tooling or priority production; and begin qualifying an alternative source while orders continue. Those demands may protect the customer’s line but constrain the supplier’s flexibility and future economics. The restructuring plan must recognize both sides of the bargain: the customer has a near-term reason to keep the supplier operating and a long-term incentive not to remain exposed. Today’s order book should not be mistaken for a permanent commitment.
What Customers Can Do That Capital Providers Cannot
A supportive customer can address liquidity through the commercial relationship itself: accelerating undisputed invoices, advancing against future deliveries, placing a firmer order, extending a contract, committing to minimum volumes, or funding the tooling and materials its own program requires. Each step reduces the outside financing needed, or makes that financing easier to obtain.
Customers also supply something lenders value and management cannot manufacture: third-party evidence. A documented commitment to continue purchasing, subject to stated conditions, helps a lender distinguish a temporary cash problem from a deteriorating market position. In a sale process, credible evidence of customer continuity lets a buyer underwrite future revenue rather than discount the business for distress alone.
The distinction between interest and commitment is where these conversations most often go wrong. Verbal reassurance is not liquidity, and a forecast is not an order. Before customer support enters the 13-week cash flow or the lender case, the economics, timing, conditions, repayment or offset mechanism and documentation should be settled with legal and financial advisors – and presented to lenders as a separate line from management expectation.
When the Customer Becomes the Lender – and Then the Owner
Spirit AeroSystems is instructive precisely because the arc is now complete. Boeing represented approximately 64% of Spirit’s 2023 revenue and Airbus approximately 19%. In April 2024, Boeing agreed to advance $425 million against amounts due under long-term supply agreements, conditioned on Spirit maintaining production readiness at Boeing’s required rates (SEC Form 8-K). Later that year Boeing agreed to further advances of up to $350 million, carrying a 6% advance fee, while Airbus extended a non-interest-bearing line of up to $107 million as consideration for divesting Airbus program assets (Spirit AeroSystems).
The ending matters more than the advances. In December 2025, Boeing completed its acquisition of Spirit in a transaction valued at approximately $8.3 billion including assumed debt, while Airbus took ownership of the sites supporting its own programs (Boeing / Airbus completion). The customers did not merely fund the supplier. They bought it, and divided it between them.
Two lessons travel down-market, and the second is the one usually missed. First, customers will provide capital when the cost of disruption to their own operations exceeds the cost of supporting continuity – leverage that comes from operational importance and switching time, not from the supplier’s size. Second, customer capital is rarely neutral money. It arrives with fees, repayment schedules, performance conditions, information rights and, frequently, a claim on the company’s strategic future. A customer that funds a supplier through distress has bought an option on that supplier, whether or not anyone calls it that. Management teams and sponsors should price that option before accepting the money, not afterwards.
What Customers Expect in Return
Customer support is rarely unconditional. A customer weighing an advance or a longer commitment wants proof that the company can keep delivering: a short-term operating plan, production or service milestones, visibility into critical inventory and staffing, quality controls, contingency arrangements, and reporting on the use of funds. For just-in-time programs, that proof must extend to near-term parts availability and the next scheduled deliveries.
Customers may also hold contractual or statutory remedies once performance looks uncertain. Under UCC Section 2-609, a party to a contract for the sale of goods may demand adequate assurance of performance when reasonable grounds for insecurity arise and, where commercially reasonable, suspend its own performance while awaiting that assurance. A single such demand, arriving in writing from a major account, often becomes the moment distress stops being private. The precise rights depend on the contract and applicable law, which is why customer communications should be coordinated with counsel before the first call, not after.
The right posture is neither silence nor optimism unsupported by facts. It is a controlled explanation of what has changed, what has not, how delivery will be protected, and when the next update will come. Confidence is built through evidence and consistency – and destroyed by a missed commitment far faster than by bad news delivered early.
The Risks Customers Can Create
The same customer that could stabilize the business can accelerate its decline. It may qualify a second source, shorten order duration, move discretionary volume, delay new programs, compress forecasts, demand more protective terms, or challenge invoices more aggressively. From the customer’s perspective these are rational risk management. From the company’s, they remove liquidity and enterprise value from the restructuring.
The danger is the feedback loop. A customer reduces orders because it fears disruption. Lower volume weakens cash generation. Reduced collections constrain the borrowing base. The company then cuts inventory, service capacity or staffing – making the disruption the customer feared more likely. What began as a confidence problem becomes an operating problem, and by then it is no longer a misunderstanding to be corrected.
Second-sourcing deserves particular attention because it is quiet and largely irreversible. Qualification takes months and is usually invisible until volume moves. By the time the order book reflects it, the customer has already spent the money and will not unwind the decision to reward a recovery. This is the strongest practical argument for engaging early: the actions that damage a supplier most are taken well before the customer announces anything.
If You Are the Customer
Much of this readership sits on the other side of the relationship – as corporates dependent on stressed suppliers, or as sponsors whose portfolio companies are. The calculation there is a straightforward comparison: the cost of supporting continuity against the cost of disruption, requalification and lost production. Where support is warranted, the structure matters as much as the amount. Advances secured against identified inventory or work in process, tooling ownership confirmed in writing, escrowed intellectual property, step-in and assignment rights, and access to production data are all more durable than an unsecured prepayment.
Timing carries its own exposure. Payments and transfers made by a supplier in the run-up to a bankruptcy filing can be attacked as preferences, and a customer holding what it believes is a repaid advance may find that position revisited in a subsequent proceeding. Setoff and recoupment rights, critical-vendor treatment and the risk that an advance is recharacterized are all worth resolving with counsel before funds move rather than after. Supporting a distressed supplier is often the correct commercial decision; doing it on an unsecured handshake rarely is.
Build the Customer Strategy into the First 30 Days
The first 30 days should produce three things: a customer map identifying concentration, profitability, contractual exposure, payment behavior, sole-source exposure, just-in-time delivery requirements, switching risk and operational dependency; a segmentation of relationships into those to defend, those that may support the plan, and those requiring a downside response; and a communication protocol assigning who speaks, what may be shared, what requires counsel’s review, and when each customer receives an update.
That analysis belongs inside the financial plan rather than beside it. The 13-week cash flow should show the impact of delayed collections, lost volume, accelerated payments and customer advances. The operating plan should identify the people, materials and service levels required to protect priority accounts. For sole-source programs, it should also identify the tooling, production capacity and delivery milestones needed to protect the customer’s schedule. The lender presentation should separate documented commitments from management expectations – a distinction lenders will test in any event, and one it is better to draw first.
The same visibility serves every other party at the table. A lender considering forbearance wants to know whether the revenue base is stable. An owner deciding whether to fund a bridge needs to know what the bridge preserves. A buyer needs to know whether customer relationships survive the transaction, and whether consents, assignments or change-of-control provisions could impair value – questions that, in a court-supervised sale, extend to whether key contracts can be assumed and assigned at all.
The Discipline of Customer Confidence
A restructuring plan that treats revenue as a given is only a financing plan. Durable recovery requires customers to keep buying, keep paying, and keep believing the company can perform through the transition. That confidence cannot be assumed, and it cannot be rebuilt with a single broad announcement.
It is earned account by account: by understanding mutual dependency, making specific commitments, delivering against them, and reflecting customer behavior honestly in the liquidity plan. Capital buys a company time to fix its balance sheet. Only customers decide whether there is a business left to fix. A restructuring is not credible until its customers make it credible.
If your company is facing a liquidity challenge or entering a transitional period, Harney Partners helps management teams assess customer concentration, protect critical relationships, and integrate customer strategy into the broader restructuring plan. Contact us for a confidential conversation.
