Back office refers to the entire area of operations which serve as support for the main activity of the company. This includes support and administrative operations, as well as those for documentation and record-keeping.
In the context of companies which offer financial services, the back office handles accounting tasks and ensures compliance with regulations.
The term “back office” originates from the actual positioning of departments in companies. The back portion of the office would be usually be used for product development and administrative work, which are activities shielded from the view of clients. Therefore, the back office is taken in contrast to the middle office and the front office.
Since the front office is the most accessible to clients, it contains the company’s salespeople and may involve corporate finance activities. The middle office, on the other hand, may focus more on IT resources. Back office tasks may not be given much attention, but they are important to maintaining smooth operations in all areas of the company.
The back office can also include accounting and human resources. It also covers the maintenance of technical infrastructure used by the different departments in the company. These tasks are usually managed by back office systems and software. Such systems may be used to store and process sales information, manage inventory and transaction data, as well as track the issuance of invoices. Management of back office processes may be outsourced or take place outside the company’s main office.
In the stock market, back office crunch is a term used to refer to the slowdown in order processing caused by high volume.