There are certain tools a small business can’t do without. There are CRM tools, employee time-tracking software, inventory management solutions, and many more. Luckily for you, instead of paying for each and every one of these, you can utilize one solution—a point of sale system.
A point of sale system—or POS—is an all-in-one tool that your business can use to operate smoothly and efficiently. It combines several different aspects of your business into one user-friendly solution.
Brick and mortar retail stores, restaurants and e-commerce stores all use some form of POS system. They’re necessary for a whole range of things like payment processing, inventory management and sales reporting.
In this article, we’ll go over what a POS system is and the benefits it can bring to your business. We’ll walk through six functionalities of POS systems and how you can decide which one is right for your business. Let’s jump right in.
What is a POS system?
A point of sale system is the combination of tools that facilitate payment processing and other retail management functions for businesses. POS systems make it possible for businesses to carry out transactions with customers and manage their business.
The term point of sale refers to the moment a transaction is made between a consumer and business. This can occur in-person at a brick-and-mortar retail location, or it can occur online through an e-commerce outlet.
POS systems can consist of both hardware and software components. This can include credit card readers, cash registers, barcode scanners, and payment processing software—we’ll touch more on these components below.
Unfortunately, your business will need to fork over some money to use a POS system. This can come in the form of monthly subscription fees and a percentage-based transaction fee. However, POS systems are a necessary component of operating a business. While they may seem like a necessary evil that your business can’t avoid, they can provide tremendous value to your business.
There are several features of POS systems that benefit businesses. POS systems facilitate payment processing, but they’re actually much more than that. Businesses can also use a POS system for building out sales reports, managing inventory, maintaining positive relations with customers, and managing employees.
Let’s take a look at six functionalities a POS system can bring to your business.
1. Payment processing
Payment processing is what most people think of when they hear the term POS system. For most businesses, this is the No. 1 feature they need from a reliable POS.
There are multiple ways a POS system can facilitate a transaction. The most basic payment processing functionality is online debit card and credit card processing. E-commerce companies can leverage point of sale systems to make money through online transactions.
Then there are brick-and-mortar businesses. These types of stores will need credit card readers with the ability to accept multiple forms of credit card payment. The most basic is a magstripe card reader. These are the traditional credit card swipers we’re used to seeing in stores.
You can also get ahead of the game by using credit card chip readers and near-field communication (NFC) readers for mobile devices. Credit card chip readers will allow customers to insert their chip containing cards. These readers enable enhanced security features for consumers.
NFC readers let customers use mobile payment apps like Apple Pay and Google Pay. Customers can pull out their smartphone, open their preferred payment app, and place it near your NFC reader to complete a transaction.
It’s important that your business stays at the forefront of payment solutions. You’ll need to accept several payment methods if you want to keep up with the spending habits of your customers.
2. Transaction management
There are a few aspects of transactions that you’ll need a POS system to account for. This includes having a navigable inventory database, issuing receipts, and customer tipping.
A crucial component of a POS is the ability to quickly ring up customers and have them on their way. Your employees gain access to an easy-to-use interface to quickly complete a customer’s order during the checkout process.
For every transaction, you’ll also need to be able to print a receipt or, at the very least, be able to email a digital receipt to customers. Some customers may want a physical receipt, while others are content with having a receipt emailed or receiving no receipt at all.
Additionally, if you operate a service-based business, you’ll need to give customers the option of leaving a tip for your workers. Pre-calculated percentages or customized tipping options help customers reward your workers for a job well done.
3. Sales reporting
POS systems are a helpful tool for tracking the performance of your business. POS software can track important business metrics and produce reports that gauge your financial health.
Modern POS systems enable you to run reports that will help you make informed business decisions. These reports can leverage sales data that will help you optimize your business operations and streamline a path to profitability.
Reporting features can help you determine which products are selling, what your margins are, and how much money you make from month to month. In this day and age, a data-driven approach to business is crucial to stay ahead of your competitors.
4. Inventory management
If your business sells products, then inventory management functionalities are a must-have. POS systems can help you track which products are coming in and what’s going out.
The best point of sale systems will give you the ability to set reminders to notify you of the most optimal time to reorder inventory. Some systems will even allow you to set automatic purchase orders that will buy more inventory when the amount of a particular product hits a certain threshold.
You’ll need to track inventory in real-time and have a finger on the pulse of your inventory levels. By knowing exactly how many products you have coming in and out, you can optimize your product line and focus your efforts on growing your business.
5. Customer relationship management
Customer management and tracking your customer data is a great way to build brand loyalty for your business. POS systems can record information that creates a better relationship with your customers.
For starters, you can reward repeat customers with discounts or through a customer loyalty program. This will encourage customers to frequent your business more often after having more positive and personalized experiences.
You can also use your POS system to communicate with customers after a transaction. If your customers opt in to receive email marketing communications, you can start sending them promotional emails. Some POS systems let you communicate with customers, while others will enable you to connect to your pre-existing CRM system.
6. Employee management
POS systems can also help your business manage your relationship with your employees. If you have several employees working for you, you’ll need to track their hours, sales commissions, and distribution of tips.
Employees will be clocking in and clocking out for every shift they work. Not only can your POS system let employees clock in and out on their own, but you can also set work schedules through your POS software.
You’ll also need to track employee commissions for completed sales and employee tip distribution. Commissions and tips can be fairly distributed to all your employees based on unique identifiers in your system.
How to choose a POS system
When shopping around for the perfect POS system for your business, there are a few different things to consider. You should take a look at your business needs, how much you’re willing to spend, and what software and hardware components your business will need.
Let’s start with your business. If you’re operating an e-commerce retail business, you’ll need a drastically different solution than if you’re operating a restaurant. For example, an e-commerce business will need point of sale software features to process sales and manage inventory.
A restaurant, meanwhile, will require more POS hardware to help your business operate smoothly. This can include receipt printers, cash drawers, credit card readers, and more.
Next, you’ll need to compare the cost structure of different POS systems. All POS systems will charge a percentage transaction fee. You should look for solutions that balance low transaction fees with top-notch solutions for your business. You may also be charged monthly subscription fees for using POS software.
Finding the right POS solution
A reliable point of sale system is a critical component of operating a profitable business. If you want to accept payments from your customers, then you’ll need to set up some form of POS system.
But POS systems are much more than only payment processing. They can bring tremendous value to your business by helping you manage inventory, employee logistics, and building brand loyalty with your customers.
To find out what a POS system can do for you business, reach out to your payment processor today.