What is a POS system?
POS stands for Point Of Sale, a computerised system that is used in retail operations and restaurants other eateries. It is used by business owners and managers to track sales, manage cash flow and inventory, improve operations as well as reduce employee fraud and theft -- all while heavily simplifying the bookkeeping and payroll processes.
POS systems typically consist of a cash register, which usually includes a computer, monitor, barcode scanner, cash drawer, receipt printer, and a customer display while the majority of them also come with a credit and debit card reader.
How do POS systems work?
Depending on the industry that the business operates in, there are different kinds of POS systems and their functionality and features vary greatly. Some specialise in a single segment while others, usually larger players, have developed flexible systems that are capable of easily adapting to almost any kind of retail and restaurant business. Despite that, they do have a lot to offer in common:
One of the biggest disappointments in a customer’s experience is when the product they seek is unavailable. Whether in retail or in a restaurant, such occasions are likely to leave customers unsatisfied with your offerings and they may never return. Nowadays, most high range POS systems have an integrated inventory management system that keeps track of all products in store and provides a clear overview of the inventory stock. This helps business owners and suppliers to deliver the right products at the right time - limiting the cases of shortages and oversupply.
Another great benefit of inventory management is that it manages special promotions and offers. Another unpleasant feeling for a customer is to be charged full price for a discounted product and that often happens (sometimes on purpose - employee fraud) in businesses that do not utilise a POS system with inventory management and/ or price tracking of some sort.
Additionally, in the case when barcodes are unreadable or non-existent, having a database of your whole inventory is essential to serve customers in a timely manner. It is common for places that do not use a POS system to take longer to service customers, for example, due to the need for the cashier to check prices of products on site. With the inventory management functionality of the system, cashiers can check prices of products without a readable barcode in seconds without moving an inch.
Secure cash flow and limited, easily-detectable employee fraud
Besides providing a clear overview and control over cash flow, POS systems also discourage and easily detect employee fraud and theft. Since they hold information on the money at the beginning of a shift, all transactions throughout the day, and the prices of products, it is very easy to estimate the exact amount that should be left at a cashier’s drawer and any inconsistencies are most likely due to an employee mistake or fraud.
Integrated debit and credit card reader
Another great benefit of using a POS system is that the majority are now designed with an integrated card reader. As supporting cashless is becoming more and more necessary for a business’ survival, the benefit of doing so is also rapidly growing. In fact, nearly all businesses see a surge in revenue after they introduce card payments. POS systems that do not have a pre-existing integrated card reader may however have, the ability for great integration for industry-leading readers.
Depending on the location you operate in, having a POS system that comes with a card reader might just be essential for the survival of your business. Take Sweden for example. The country’s rate of cash payments in stores fell from 40% in 2010 to 15% in 2016 while in terms of the total value of purchases it accounted for only 1.4%. In fact, even public transportation and some homeless people have also started adopting card payments and using card readers. As we are rapidly headed to being a cashless society, it is absolutely necessary to support card payments in order to succeed.
Oversimplified and secure bookkeeping process
With a POS system, the booking process turns from a daunting, time-consuming task into a relatively quick and simple, fault-proof process. All transactions, inventory stock, and cash flows are under constant supervision by the system’s software, it is also able to generate accurate reports and an in-depth business performance analysis. This is especially important when your business has more than one point of sale or numerous locations open as keeping track of so much information in written format is complex at best.
Cloud data storage and processing, or a POS Software-as-a-Service
Due to an ever-increasing danger of hacker attacks, stringent security regulations are in place to ensure that customers’ data is safe. Depending on how critical the information is and the number of people whose data you’ve acquired, these regulations can enforce a different level of security. If you store a lot of information, it will most likely be required to have robust protection set in place and that might now be possible for businesses of all sizes.
This is precisely the reason why increasingly more businesses choose to store and process their information on the cloud. Instead of using your own servers that require infrastructure, maintenance, and power -- you can pay a small fee to a company that has orders of magnitude better security than probably anything you can get on the market. Going the cloud route is also necessary for easy management of multiple locations as it enables business owners to globally surveillance and control their operations.
Having specific software features is also becoming necessary in order to efficiently adapt a POS system to your operations. A good example of special software features is in the restaurant industry - customers choose their products using a touchscreen on their table and the kitchen staff immediately receives the order as requested. The tables are labeled and once the food is ready, the waiter can easily identify and deliver the food to the right people. This cuts down the need for a larger number of staff, enables accuracy, and overall improves operations.