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Back office

Back office

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A back office is a part of most corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

s where tasks dedicated to running the company itself takes place. The term "Back office" comes from the building layout of early companies where the front office
Front office
Front office is a business term that refers to a company's departments that come in contact with clients, including the marketing, sales, and service departments...

 would contain the sales and other customer-facing staff and the back office would be those manufacturing or developing the products or involved in administration but without being seen by customers. Although the operations of a back office are seldom prominent, they are a major contributor to a business.

Examples of back-office tasks include IT
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...

 departments that keep the phones and computers running (operations architecture
Operations architecture
Operations architecture allows the ongoing support and management of IT services infrastructure of an enterprise . The IT infrastructure of an enterprise will typically comprise many different systems and platforms, often in different geographic locations...

), accounting, and human resources
Human resources
Human resources is a term used to describe the individuals who make up the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations...

. These tasks are often supported by back-office systems: secure e-commerce software that processes company information (e.g. database
Database
A database is an organized collection of data for one or more purposes, usually in digital form. The data are typically organized to model relevant aspects of reality , in a way that supports processes requiring this information...

s). A back-office system will keep a record of the company’s sales and purchase transactions, and update the inventory as needed. Invoices, receipts, and reports can also be produced by the back-office system.

In banking, the back office includes a heavyweight IT processing system that handles position keeping, clearance
Clearing (finance)
In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction....

, and settlement
Settlement (finance)
Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against payment of money, to fulfill contractual obligations, such as those arising under securities trades....

.

In investment firms, the back office includes the administrative functions that support the trading of securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...

, including record keeping, trade confirmation, trade settlement, and regulatory compliance.

In sales
Sales
A sale is the act of selling a product or service in return for money or other compensation. It is an act of completion of a commercial activity....

, the back office typically plays a key role internally, providing support to the sales force for administrative duties such as legal, finance, marketing, order management, operations support, etc. as well as customer facing roles typically positioned to include functions that support customer order fulfillment
Order fulfillment
Order fulfillment is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer...

 and duties involved with readying customer-support call centers.

Back offices may be somewhere other than the headquarters
Headquarters
Headquarters denotes the location where most, if not all, of the important functions of an organization are coordinated. In the United States, the corporate headquarters represents the entity at the center or the top of a corporation taking full responsibility managing all business activities...

 of a company. Many are in areas and countries with cheaper rent and lower labor costs. Some office parks such as MetroTech Center
MetroTech Center
MetroTech Center is a business and educational center in Downtown Brooklyn, New York City. Original occupants of this area include JPMorgan Chase, New York City Fire Department Headquarters, Bear Stearns, Keyspan Energy, now National Grid, Empire Blue Cross Blue Shield, and Polytechnic University,...

 provide back offices for tenants whose front offices are in more expensive neighborhoods. Back office functions can be outsourced
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...

to consultants and contractors in any country.

External links

  • Business Link (2006). Maintaining your web content and technology. http://www.businesslink.gov.uk/bdotg/action/detail?r.s=sl&type=RESOURCES&itemId=1075383691. Retrieved Jun. 25, 2006.
  • Haag, S. et al. Management Information Systems for the Information Age (3rd Canadian ed.) Toronto: McGraw-Hill
  • Investorwords.com (2005). Back Office. http://www.investorwords.com/376/back_office.html. Retrieved Jun. 24, 2006.
  • MSN Encarta Dictionary (2006). "Back Office (Archived 2009-10-31)." Retrieved Jun. 24, 2006.