A branch is part of a company as a secondary point of sale, where products or services are marketed, with a certain degree of autonomy in their management. Keep reading to learn about its characteristics, as well as the importance it has for businesses to reach new customers.
Much has been heard about branches, it is a term that anyone uses knowing what it is about, but without knowing what it really represents. In this sense, for the development of business there is this legal figure that is linked to a central organization. The branch of a company carries out a series of commercial activities that follow various previously established economic and managerial guidelines.
What is a branch?
Coming from the Latin succursus , meaning help or assistance, it is a secondary establishment, point of sale or business unit that, although located in a different place to the main one and has a certain autonomy, depends on a central or parent organization . The branch does not have its own assets or legal personality, so it bears the name of the company to which it is associated.
To better understand the meaning of a branch, the Royal Spanish Academy defines it as “an establishment that, located in a different place than the central office on which it depends, performs cpa email addresses the same functions.” For his part, Joaquín Andrés Moreno Fernández explains in his book Contabilidad Superior (2014), that branches “form part of an economic entity, are responsible for promoting business and act on behalf of the economic entity of which they form part.”
In addition, Moreno Fernández states that branches do not have administrative or economic independence, because they are subject to the policies and provisions of the main office. However, these establishments can carry out the following operations as part of their commercial dynamics:
Receive cash and merchandise from the parent company.
Buy merchandise from suppliers.
Sell, provide credit and deliver items to customers.
Invoice and collect payment for items sold.
Hire the necessary personnel for its operation.
To make some transformation to the goods or products, on some occasions.
Read on to learn about current approaches to business administration .
Importance of branches
Companies use this model when they want to expand their activity. Branches are important because they serve to extend business beyond the boundaries of the main offices . They have the possibility of reaching more and new customers. In some cases, branches can be more economically relevant than the parent business itself, even if they remain secondary establishments.
In addition to boosting sales, branches allow for greater coverage and positioning within the market, increasing the number of points of sale and achieving more solid finances in order to grow and have a greater reach. In this way, companies have the opportunity to have certain products dominate certain locations.