indirect costs of financial distress

Definition

Costs in the form of lost revenue, lost opportunities, and the increased cost of continuing operations suffered by a company as a result of its deteriorating financial condition. Companies in financial distress are prone to losing customers, key employees, business opportunities, and favorable credit terms, all of which will negatively affect their cash flow and balance sheets.

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The indirect costs of financial distress were sneaking up on us and I knew we would be in debt for a long time.

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You should always plan for some indirect costs of financial distress and do your best to handle them when they come.

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The indirect costs of financial distress were increasing so much that the company had to consider the alternative cost of its operations.

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indirect cost indirect diversification benefits