The financial accounting term initial direct cost is used to describe those costs that are directly associated with negotiating and completing a contract at the start. Initial indirect costs consist of brokers commissions, legal fees, creditworthiness checks, preparation of documentation, in addition to other costs that are incremental and directly attributable to the agreement.

Initial direct costs are costs incurred to negotiate and finalize a contract.

These costs arise at the start of the agreement and relate directly to securing it. They are incremental and would not occur without the contract.

Examples include brokers commissions, legal fees, creditworthiness checks, preparation of documentation.

Only costs that are directly attributable to obtaining the contract qualify as initial direct costs.