This happens when the Preferred Customer Form used is a Custom Form that does not have Subrecords enabled or displayed.
Perform the following to confirm issue is with current form:
1. Edit a Customer Record.
2. On the Custom Form field, switch to Standard Customer Form.
3. Click the Relationships tab.
4. The Subcustomers subtab is available.
To enable Subrecords on the Preferred Custom Form, perform the following:
1. Navigate to Customization > Forms > Entry Forms.
2. Click Edit beside the preferred Customer Form to customize.
3. Click the Lists tab > Relationships subtab.
4. Check the Show box for Subrecords (default Label = Subcustomers).
5. Click Save.
The same resolution applies to a missing Subcustomers option from the Create New menu on a customer record. If the Subcustomer tab is missing or not displayed on the current customer form used, the option is hidden from Create New menu as well.