Front and Back Offices -Differences
The terms ‘Front’ and ‘Back Office’ are used in business to refer to the form of office work conducted. In general the front office interacts with customers/clients and handles the day-to-day activity. The back office is where management leads the organization and handles the underlying financial affairs.
The two following sections explain in more detail the associated functions and tasks for each type of office. Later on this article illustrates the most common businesses separating the office environment into the two halves. Sprinkled throughout these sections are comments illustrating the advantages of having two separate office functions.
There is one unique factor separating the front office from the back; it is customer interaction. Think about your dentist. The front office takes your phone call, schedules the appointment, greets the patient, ensures proper check-in and documentation. When the patient departs, the front office collects the fee, reschedule the patient and coordinates any pharmaceutical needs.
The following is a short list of front office duties and corresponding tasks:
* Provide customer/client/patient service
– Receive phone calls from all parties, redirect as appropriate
– Answer inquiries, explain policies and procedures
– Address emergency situations including physical injuries
– Ensure any documentation dealing with customers is correct and complete
* Handle Deliveries
– Receive incoming packages and mail
– Process and outgoing mail
– Direct and coordinate deliveries
* Address Employee Issues
– Direct employee questions to the appropriate supervisor
– Answer employee questions related to timing of pay, holidays etc., redirect to human resources if needed
– Ensure proper dissemination of important information and use a notification system for long-term items
– Maintain a list of contacts with phone numbers, addresses, electronic addresses, web-sites etc. for all third parties
– Maintain a master schedule for the entire company including management, office staff, programs and physical facilities
– Update the annual schedule for activities and production deadlines
* Office Maintenance
– Coordinate cleaning and maintenance
– Order and ensure all supplies for office operations are available
In most offices the primary person in the front office responsible for the above is the office manager. This individual may be responsible for up to seven or eight staff to complete the above duties and tasks. Under the office manager’s authority are receptionists, clerks and sometimes interns.
The best advantage the front office provides is a shield to prevent customers from consuming or ‘Bending the ear’ of management and professional staff customarily located in the back office.
The back office gets its name from the historical physical attribute. In most small business environments management and the professional staff are secluded from the noise customarily located near the front door.
It is in the back office where the management team spends their time planning, organizing and controlling the operations of the company. The following is a short list of the back office responsibilities:
Senior Management – includes the owner, senior managers and respective department heads; their primary responsibility is to set goals and lead the company.
Human Resources – required to match company employment needs to available manpower.
Finance – held responsible for the availability of working capital.
Engineering – if applicable, this department is accountable for design and upgrades to the production process.
Sales – often in the front office (customer interaction) but sometimes is located in the back office depending on the nature of the business.
Legal – often subcontracted to an outside firm.
The back office is generally separated from the front primarily to minimize disruptions from customers and employees. Most of the back office personnel are paid significantly more per hour than front office staff. Reduced delays allow for maximum efficiency of time.
EXAMPLES OF BUSINESSES WITH FRONT AND BACK OFFICES
* Medical Practices
* Legal Firms
* Accounting Firms
* Engineering Firms
* Manufacturing Operations
* Social Service Companies
* Non-Profit Organizations
Summary – Front and Back Offices
The terms ‘Front’ and ‘Back Office’ are a historical reflection of the physical proximity to the front door of the business. In modern use it also refers to the general tasks associated with the respective office. The front office regularly addresses customer and employee issues. The back office harbors the management team and the professional support staff. ACT ON KNOWLEDGE.
Do you want to learn how to get returns like this?
Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.
There are four key principles used with value investing. Each is required. They are:
- Risk Reduction – Buy only high quality stocks;
- Intrinsic Value – The underlying assets and operations are of good quality and performance;
- Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
- Patience – Allow time to work for the investor.
If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above.
Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:
- Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
- Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
- Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.
Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:
- Lessons about value investing and the principles involved;
- Free webinars from the author following up the lessons;
- Charts, graphs, tutorials, templates and resources to use when you create your own pool;
- Access to existing pools and their respective data models along with buy/sell triggers;
- Follow along with the investment fund and its weekly updates;
- White papers addressing financial principles and proper interpretation methods; AND
- Some simple good advice.