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What you need to know about back-office services

Posted by Shivali Anand

November 18, 2021    |     4-minute read (724 words)

If you recently opened a business, you may have seen messaging on how to handle back-office services. But in today's world of open office designs and remote working, many entrepreneurs are unsure what the term means. Check out the information below to learn what back-office services are and whether your business stands to benefit from them.

Essential to the operation of your business

Back-office services refer to functions that are necessary for the smooth functioning of your company but that are not typically visible to customers. For example, your receptionist, sales team and customer service representatives are typically considered front office because they have direct contact with clients. Meanwhile, your accounting, human resources, payroll and IT personnel are deemed back-office staff, because they don't engage directly with customers — but they are nevertheless critical to the operation of your business.

Typically, employees in the back office supply the resources that allow those in the front office to succeed. If a client asks whether they can have a particular part in 24 hours, the sales staff may not have the resources to fulfill the request. Most likely, someone in the back office, like an inventory management representative or supply chain specialist, will assist sales in locating the part and getting it to the client quickly. This is an example of how front-office and back-office employees collaborate to support your company's operations.

Here are a few of the back-office services required to keep a business running.

Finance, accounting, taxes

When you consider how many invoices your firm creates and pays in a week, the total may be staggering. Your back-office personnel work to ensure that accounts payable, invoicing, cash flow management and year-end reporting are integrated into the business, ensuring payment is never missed and keeping track of money owed to the company. They also ensure adherence to regulatory requirements for the maintenance of your ledgers.

Furthermore, the accounting department endeavors to submit your taxes on time and in accordance with all regulations while also optimizing every potential deduction. Your finance staff also makes sure your company's strategic financial strategies are correctly implemented. They'll handle forecasting and planning, as well as cash flow analysis and management reporting, so your company can track where it is now and where it's headed.

Insurance

Once you've built a firm, you'll want to make sure it's safe, which is where insurance comes in. Insurance professionals make certain that you have the commercial coverage you need to comply with local regulations, such as workers’ compensation, and coverage to protect you against litigation, such as business liability insurance. Every entrepreneur values the peace of mind that comes with knowing their business is adequately protected.

Payroll, HR, benefits and recruiting

Once you've hired workers or contractors, it's essential to ensure your HR, benefits and payroll rules are in order. No company can afford to break wage and labor rules, and employers must pay their employees. Your back-office workers ensure that your HR and payroll operations run smoothly and that your employees are satisfied with the quality of service provided.

Recruiters see that your firm is well-staffed, bringing on the proper individuals and onboarding them to be well-trained and ready for a long-term career with you.

IT and technology operations

Your tech department might be as small as one data entry support employee or as large as a coding department with over 100 employees. These employees are critical to keeping your digital operations operating smoothly and ensuring that you (and your clients) don't encounter any problems when using your platforms, programs, applications or sites. Members of this department may also give IT assistance to your internal workers, ensure that your cybersecurity programs are robust, and make certain that all storage programs are kept secure both physically and in the cloud.

Should you outsource back-office services?

Although every business recognizes the need for back-office services, not all firms have the personnel to provide them. Entrepreneurs may opt to outsource some or all back-office functions by delegating responsibility to professionals located elsewhere. 

Outsourcing generally saves time and money, because the business pays for services rather than employing in-house, full-time staff to handle these obligations. If you've just started a business, consider the back-office activities you already have in place and those which you may need in the future to decide whether outsourcing could be an effective solution.

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