Perhaps equally, if not more damaging are the indirect costs of financial distress.Some examples of indirect costs are:

Question

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The indirect costs of financial distress can be just as damaging as the direct costs. Loss of current customers (A) can occur if they perceive the company to be financially unstable and may look for alternative options. Loss of business reputation (B) can occur if the company becomes known for financial instability, which can be difficult to overcome. Finally, management consumed in survival mode (C) can take away from strategic direction and prevent the company from growing and improving. All three factors are potential indirect costs of financial distress.

Perhaps Equally, If Not More Damaging Are the Indirect Costs