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Lesson 6 Financial Implications
ObjectiveIdentify the financial considerations of using eBusiness.

Financial Implications

We have mentioned the financial implications of the eBusiness many times throughout this course, but what are these implications, and how are they important?

Other areas for consideration are:

  1. Unit cost and its effect on product pricing
  2. Invoicing and billing
  3. Account management
  4. Debt recovery
  5. The possible tax implications of global trading
  6. The need to accept new payment methods, for example,. credit cards
  7. Impact on stock market valuation

Question: What would be considered the technical build costs?
Answer: These might include the direct cost of equipment and payments to an internal development resource, and may include costs incurred if an externalcompany provides equipment and services

Certain items at are currently being taxed

The Internet tax issue is centered on sales over the Internet.
The most difficult Internet tax issue is centered on sales over the Internet. What are the merits and drawbacks of taxing eBusiness?
Some would argue that the real points of contention are how to manage taxation of digital goods and the taxation of goods shipped across state lines. Those questions have yet to be settled. What other issues are there concerning taxation and eBusiness?
In the next lesson, we will discuss the link between manufacturing and eBusiness.

Investments in information technology (IT), from a capital expenditure perspective, should be considered like any other capital-intensive investment by a corporation. IT investments usually have comparatively shorter life expectancies than other types of capital projects. A facility may have a useful operational life of approximately 25 years, whereas an e-business solution’s hardware components may have a useful life of only 5 years. However, the intellectual property value of the developed software may be substantially longer. Often, e-business solutions require more technical labor to build and then subsequently to run the solution than other projects. Additionally, to maintain a valid operational environment, numerous upgrades to the deployed system will be required on an ongoing basis. From a commonality perspective on financial resource consumption, both IT and non-IT assets have similar process characteristics. Executive managers make the decision to invest in capital assets. The expenditure of funds is authorized and expensed and the resulting capital asset is depreciated over the life of the system or equipment.