Its a two way street.  Why would you fear losing this client, if you simply explained to them that you have limitations on how far you are willing to extend credit?  Because this is exactly what you are doing.  I think it very generous of you to have not cut them off already and this company should feel the same way.  They have $XXXX amount of YOUR money to help them continue to operate.  As someone else has stated you should establish a rule (draw a line) on the amount you are willing to extend to each client.  Mind your own business.  In other words make sure you take care of yourself because no one else will.