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A back office in most corporations is where work that supports front office work is done. The front office is the “face” of the company and is all the resources of the company that are used to make sales and interact with customers and clients. The back office is all the resources of the company that are devoted to actually producing a product or service and all the other labor that is not seen by customers, such as administration or logistics. Broadly speaking, back office work includes roles that affect the costs side of a business’s trading statement and front office work includes roles that affect the income side of a business’s trading statement.
They can include functions such as accounting, planning, inventory management, supply-chain management, human resources and logistics. Some office parks provide back offices for tenants whose front offices are in more expensive neighborhoods. Back office functions can be outsourced to consultants and contractors, including ones in other countries. A carrying broker is a brokerage firm that provides back-office support for other brokers via an alternative service arrangement designed to save time.
Back Office
For example, a manufacturing equipment salesperson may enlist the help of back-office staff to provide accurate information on inventory and pricing structures. The back office is the portion of a company made up of administration and support personnel who are not client-facing. Back-office functions include settlements, clearances, record maintenance, regulatory compliance, accounting, and IT services. Although the operations of a back office are seldom prominent, they are a major contributor to a business’s success.
- Today, most back-office positions are located away from the company headquarters.
- The front office is the “face” of the company and is all the resources of the company that are used to make sales and interact with customers and clients.
- They can include functions such as accounting, planning, inventory management, supply-chain management, human resources and logistics.
- Timothy Li is a consultant, accountant, and finance manager with an MBA from USC and over 15 years of corporate finance experience.
Client facing refers to the point of direct contact and interaction between a business and its customers. Overhead refers to the ongoing business expenses not directly attributed to creating a product https://globalcloudteam.com/ or service. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Adam Barone is an award-winning journalist and the proprietor of ContentOven.com.
What Is Back Office?
Many business school students from non-target colleges and universities see Back Office work as a way to gain experience within a firm and potentially network up into the Front Office roles. The back office is the portion of a company made up of administration and support personnel, who are not client-facing. Today, most back-office positions are located away from the company headquarters.
An account manager is an employee who is responsible for the daily management of a particular customer’s account with the business. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Though this saves money for the company, the employee may also have to accept a lower salary if they are moving from a Front Office position in a central location to a more remote location or even a work-at-home arrangement. A custodian bank is a financial institution that holds customers’ securities in electronic or physical form to minimize the risk of theft or loss.
Back Office: What It Means In Business, With Examples
Some firms offer incentives to employees and applicants who accept remote positions. For example, a financial services firm that requires high-level accounting could offer a $500-per-month housing subsidy to experienced CPAs to work from home. If it costs $1,000 per month to secure office space per individual, a housing subsidy of $500 per month would result in an overall savings of $6,000 per year. The cost savings can be significant when employing many remote professionals. Although back-office staff members do not interact with customers, they tend to actively interact with front-office staff.
Many are located in cities where commercial leases are inexpensive, labor costs are low, and an adequate labor pool is available. Timothy Li is a consultant, accountant, and finance manager with an MBA from Enterprise Back office USC and over 15 years of corporate finance experience. Timothy has helped provide CEOs and CFOs with deep-dive analytics, providing beautiful stories behind the numbers, graphs, and financial models.