Packing multiple accounts receivable into one investment product may look diversified at first glance, but a deep dive often finds the top 3 buyers take up 70% of the total pool value. This "false diversification" is more troublesome than obvious high risk, as it hides under the "pooling" structure, and you will never notice it without active due diligence.
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To judge single buyer concentration risk, do not focus on "how many invoices there are", but calculate "in the worst case, how much you will lose if the largest buyer defaults on payment".
Step 1: Locate the largest debtor in the asset pool
The term "diversification" in accounts receivable financing has a clear quantitative standard. China's asset securitization rules require the underlying asset pool to include at least 10 non-related debtors, and the share of a single debtor's pooled amount cannot exceed 50%. Any pool that breaks this rule is defined as highly concentrated by regulators.
On the contrary, if the pool you see does not even meet this basic standard — for example, only 5 debtors with the largest one taking 60% share — you do not need further checks, concentration risk is already the core risk.
[Action]: Find the top 10 debtor list and their corresponding share of total amount from the asset pool information disclosed by the project.
[How to do]: On the project's "asset pool composition" or "underlying asset disclosure" page, you can usually find the debtor distribution statistics table. Locate three sets of data: "top 10 debtors", "largest debtor share", and "total share of top 5 debtors".
[Completion Standard]: You get two numbers: the largest debtor's share, and the total share of top 5 debtors.
Step 2: Replace subjective judgment with the Herfindahl-Hirschman Index
Judging concentration only by individual percentage numbers easily leads to misjudgment — is 20% a high or low share? It depends on the distribution of all other debtors.
The Herfindahl-Hirschman Index (HHI) is the standard tool for measuring concentration in traditional finance, calculated as the sum of the square of each debtor's percentage share. Its value ranges from 0 to 10000:
0-1500: Low concentration
1500-2500: Moderate concentration
Above 2500: High concentration
An academic paper on RWA asset risk also uses HHI to measure holder distribution when analyzing concentration risk of on-chain assets. If the largest of 10 debtors takes 30% share, the HHI is around 1500; but if the largest debtor takes 80% share, and the remaining 20 debtors split the remaining 20% evenly, the HHI can still exceed 6500 — the latter is actual "over-reliance on a single party".
[Action]: Estimate the HHI level of this pool, or at least understand the concentration data disclosed by the project side.
[How to do]: Take the percentage share of each debtor, square it and add all results together. If the project side does not disclose the full debtor list, at least ask for the total share of top 5 and top 10 debtors. If the total share of top 5 exceeds 60% and the total share of top 10 is less than 80%, the pool is highly concentrated in the top few buyers.
[Completion Standard]: You can judge if this pool belongs to "diversified", "moderately concentrated" or "highly concentrated".
Step 3: Check the industry and geographic distribution of debtors
Concentration risk does not only appear as "over-reliance on one single client", but also as "over-exposure to one single industry" or "one single region". Allianz Trade's credit risk management framework lists "credit concentration risk" as one of the three major B2B credit risks, specifically referring to "accounts receivable being overly concentrated in a small number of key clients or specific industries/regions".
Take an extreme example: a pool has 100 debtors, but 95 of them are real estate developers located in the same province. Once the industry enters a downturn, all 95 debtors will face payment issues at the same time. This risk is invisible at the single debtor level, but the industry concentration risk is already too large to ignore.
[Action]: Check if debtors are concentrated in the same industry or the same region.
[How to do]: View the "debtor industry distribution" and "debtor regional distribution" statistics disclosed by the project. If one single industry takes more than 50% share, or one single region takes more than 60% share, it counts as significant concentration.
[Completion Standard]: You confirm the industry and regional distribution situation, and know if the pool has "hidden concentration risk".
Risk Alert
The RWA asset concentration risk on chain can be measured quantitatively. One institutional analysis of 263 tokenized assets issued by Ondo found that the top 10 holder concentration of most assets exceeds 90%. This means even in seemingly "decentralized" RWA products, the actual holder distribution can be far more concentrated than traditional ABS products. It is very likely that the accounts receivable pool you plan to invest in is not much better than this level.
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Post-operation Verification
After finishing the above 3 steps, you should be able to answer the following questions:
What is the share of the largest single debtor? (Alert is needed if it exceeds 20%, it is directly high risk if it exceeds 50%)
What is the total share of the top 5 debtors? (Total over 60% means high concentration)
Are debtors concentrated in the same industry or the same region? (A single industry/region taking over 50% share counts as hidden concentration risk)
If the project side refuses to disclose this set of basic data, it essentially asks you to invest blindly. This reason alone is enough for you to reject the investment.
