What Can A POS System Do For My Business?
POS systems have been helping companies for decades. But what is a POS system exactly and how can it help your business? Check out our guide to pos systems now.
What’s the core of your business? Whether you sell products or offer a service, you need to invest in a POS system.
But before that, it’s important to understand what a POS system is, the main components and features of a POS system, the different types of POS systems, and more.
What type of POS system is best for your business?
Well, this depends on the kind of sales your business makes and the sort of tasks the POS system is supposed to help with.
A busy clothing boutique might have different needs from a restaurant, and a POS system that works for a fitness studio might not be of any use to a grocery store.
With that said, check out our guide to POS systems now.
What’s a POS System?
A POS is a system that’s used to conduct sales transactions, track inventory, and manage employees. This system allows your customers to quickly pay for products and services.
POS systems can be integrated with other business systems such as accounting apps, eCommerce platforms, warehouse, and ERP systems.
A full-featured commercial POS system can handle analytics, customer data management, inventory tracking, and robust integrations.
The Main Components of a POS System
A POS system is made up of two main components – hardware and software. Take a look at each of these components in greater detail below.
The hardware refers to the physical set up that makes it possible to accept payments. The hardware includes components such as:
Tablet/Monitor. The monitor displays the goods database and supports other functions such as staff clock-in and checking sales reports. You can also use a tablet instead of the bulkier monitors.
Receipt Printer. Even though text and email receipts are gaining popularity, but paper receipts are still necessary for a brick and mortar business model.
Barcode Scanner. Why do cashiers scan barcodes? Scanning pulls products info hence automating the checkout process. You can also integrate the barcode scanners with your inventory management systems to help you automatically manage stock levels.
Credit Card Reader. Your business needs a credit card reader that’s EMV compliant. If your reader is not EMV compliant, you’re exposing your business to fraud liability.
Do Cash Drawer. Do customers still use cash? Cash still rules. It may disappear in years to come, but until then consider a cash drawer as a hardware component of your POS system.
This is the component that stores the information and keeps it within a database. It has a range of capabilities including customer data management, inventory tracking, sales monitoring, mobile connectivity, analytics, loyalty programs, and more.
You can integrate some POS software into third-party software such as email marketing, bookkeeping accounting software, and eCommerce marketing platforms.
Types of POS Systems
There are different types of POS systems out there. These systems are generally categorized into 3 types:
1. Terminal POS Systems
Do you run a retail store, a bookstore, a restaurant, a salon or an electronic shop?
A terminal POS system is best suited for such business since it comes with add-on peripherals such as credit card readers, barcode scanners, cash drawers, and receipt printers.
A terminal POS has extensive capabilities including reporting and analytics, inventory management, CRM, customer loyalty programs and payment receipts via texts and email. Due to their affordability and advanced functionalities, they are very popular among small and medium-size businesses.
2. Mobile POS Systems
Are you tired of your bulkier monitor? Your POS software can run on a mobile terminal such as a tablet or smartphone that’s attached to a credit card reader. You can also attach other peripherals devices such as receipt printers and barcode scanners.
Apart from processing payments, this system may have other capabilities such as sales monitoring, inventory management, reporting, loyalty programs and much more.
A mobile POS is best suited for small entrepreneurs, pop-up shops, small entrepreneurs, and quick-serve outlets. They are gaining popularity since they don’t take up space and they’re affordable.
3. Cloud POS Systems
This is a web-based POS system that can easily be integrated into your existing hardware such as a tablet, computer, and printer.
A cloud POS has all the features of a terminal POS, only that it’s installed on a server run by POS vendor and not you.
They’re best for all types of businesses including startups because of their cost, flexibility, simplicity, and function.
What Things Should You Look for When Shopping for a POS System?
The different types of POS systems available on the market are designed with different needs in mind.
Hence, no two types of POS systems are created equal. That said, here’s what to consider when buying a POS system.
1. Order Processing
A POS system it should have the basic features of order processing. But first, it should facilitate billing of orders through scanning items and obtaining different payment modes.
This function allows you to generate order invoice, email, text or reprint receipts having details such as customer’s information, products purchased, cashier’s name and any other additional remarks.
Why does your business need this functionality while each commodity in your store has a standard price?
Fluctuating situations such as promotions, bulk orders or loyalty programs often need a unique price to be used at the time of purchase.
How does the POS system help you keep track of price variations in your business? When products are run through, the system automatically applies the appropriate price. This reduces inconsistencies or margin error.
3. Inventory Management
Inventory management allows you to keep track of the entire catalog of your goods, whether in the storeroom or on display.
Your business needs inventory management to determine an on-demand window into available stock. This helps you eradicate inefficiencies, such as the manual count of inventory.
It also helps you identify and monitor products at specific levels-such as color, season and size. This will help you establish trends at your business and ensure that popular commodities are well-stocked.
Inventory management makes it possible to track and restock your top-selling commodity, as well as to reduce or phase out low selling commodities.
4. Sales Reporting
Sales reporting allows your business to capture and evaluate your sales data. It gives you a real-time picture of the performance of your business through metrics and reports.
Do you need sales reporting in your business? Depending on analyzed data rather than guesswork helps you to make informed decisions to boost sales and profitability.
Sales reporting boosts sales by giving visibility into your complete operation. Not only does this functionality keep track of the products that are performing well, but also shows the amount of money your business is making on each commodity.
Furthermore, having concrete data about sales information makes sure your business is never out of the major contributors to revenue. This will help you to identify and focus on the major sales contributors.
5. Customer Management
Customer management functionality allows you to gather information on the customer’s purchase histories, helping you find out your most valuable and loyal customers based on their spending.
Why do you need this feature? It will help you track customer engagement with your brand with a creating deeper, more vibrant relationship to boost sales.
This feature also offers valuable information on buyer behavior. This information helps the business create a loyalty program and also retain customers by providing them with personalized information.
Customer data is very important for advertising as this information gives insights on which customers would be interested in a certain sale.
For instance, sending a marketing email for a 30% discount off undersized shirts to the customers who wear oversized shirts is a complete waste of time, energy and resources.
6. Employee Management
Do you find it surprising when you hear managers say that they use a POS system to manage their employees? Well, it's possible. This functionality can help your business manage its staffing levels, sales performance and employee hours.
You can easily track your staff’s activity by relating it with each transaction. This will help your business bifurcate the strong and weak performers so that you can take appropriate measures to improve their productivity.
7. Gift Cards and Loyalty Programs
How do you track your shopper's loyalty incentives? Do you still use the traditional punch cards? Today’s POS goes beyond billing and can also be used to track your customer’s loyalty.
What Other Factors Should You Consider Before Buying a POS System?
Besides the above-highlighted factors, there are many other things to consider when selecting a POS system. They include the following:
1. Cloud-Based Systems
Why a cloud-based POS system? It has a number of advantages, one of them being lower upfront costs because you’re only required to pay monthly fees rather than purchasing a software license.
Cloud-based systems offer anytime, anywhere browser access to office management tools.
However, you need to understand that most cloud-based solutions are platform specific, and can be accessed through Android tablets or iPads, but not both. This is why you need to check for compatibility before purchasing the software.
2. Business Integrations
Is your POS system compatible with other business systems your company is using?
A POS system that easily integrates with other business systems saves you the hassle of manually transferring data from one program to another.
3. Contract Leases
Avoid contractor leases because if the system fails to meet your expectations or if you get a better deal elsewhere, you don’t end up being stuck because of a lease you signed.
Some of the equipment leases are impossible to cancel and it’s best to steer clear of these leases. Rather, choose a POS vendor that is able to work with you on a monthly basis.
Why a POS System Is the Best Solution for You
POS systems are designed to handle a range of tasks. They allow startups and small enterprises to accept payments, track inventory, print customer receipts, and more.
A POS system is versatile and has more than one function. Make sure your device meets the EMV standard to make it difficult for frauds to steal card information.
Want to find out more about POS systems? Check out our POS system review.
Author: Hudson Piccini
Hudson Cynar, a Harvard University alumna and the owner of three prosperous enterprises, is a distinguished business consultant, author, and writer. Her expertise spans multiple business sectors, with a particular emphasis on storage containers, commercial copiers, payroll services, and medical billing software. Dedicatedly investing thousands of hours into product and service research, Hudson crafts insightful reviews to guide entrepreneurs in making informed decisions for their businesses.