Point of Sale Systems Explained: What's a POS System?
If you are starting a company, you're probably considering investing at a point of sale (POS) system. But if you have only ever been on the other side of the counter in a point of sale transaction, you probably have many questions regarding what POS systems are, how they operate, and if your company needs one or not.
We put together this enlightening overview about what's a POS system so that you can learn the fundamentals of how they work, get some insider information about the true worth, and help you decide which kind of POS system is the ideal selection for your company.
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Simplifying Point of Sale Systems
To put it simply, a POS system is composed of hardware and software that works collectively to process sales and payment transactions at the point of purchase. It performs all the basic cash registers functions like ringing up things by section, tracking sales, including taxes, and generating receipts.
But to understand the way the POS system works, it is likely more fair to compare it to a PC as opposed to a cash register. With a computer, you install the sort of applications (or app) you'll need -- such as Microsoft Word to create documents -- anyplace on the hardware or use web-based applications like Gmail for email that you access on the net.
A POS system functions in much the same manner. Point of sale software is installed on POS hardware, and it is powered by either a local server or internet connection. Furthermore, like the sophistication of a computer, it can do all these other business related tasks like monitoring inventory, help you handle vendors and worker labor costs, and a lot more -- we're going to discuss.
Are you ready to dive into the specifics?
Types of POS Systems
When it comes to finding a POS system to help run your business, it is not one size fits all. Various kinds of businesses operate differently from one another. They manage customer support, the sales process, and their back offices in an assortment of ways.
Thus, to get the maximum value out of a POS system, consider using one that is designed for your particular type of business and operational procedure.
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Retail POS Systems
On the surface, retail POS systems may seem relatively simple:
- A client brings merchandise they want to buy into the checkout counter
- The sales associate reads the products' barcodes, which adds all of the items into the order, calculates sales tax, and provides the total amount due
- The customer pays with cash or credit card (or debit card), and the transaction is complete
Easy, right? From a client's perspective, yes, it is effortless -- but that is kind of the point. From the perspective of business owners, it is all of the data collection and monitoring beneath the surface that matters most.
When searching for the Perfect retail POS system for your business, make sure it contains:
- Advanced inventory management capacities including an inventory matrix which takes sizes, colors, models, or fashions of things into account
- A customer relationship management (CRM) so you can create personalized email marketing campaigns
- Layaway services and features to assist customers manage those off-the-shelf things
- Split tenders so clients can pay multiple ways for one sale
- Setup and monitor employee commissions to inspire your staff to sell more
Restaurant POS Systems
In comparison to retail point of sale systems, bar and restaurant POS systems are a horse of a different color when it comes to operational processes at the point of purchase.
Based on the kind of restaurant you are opening -- a fine-dining institution, the local dive bar, or a fast-casual eatery --you will need a point of sale system developed for your particular market in the food and drink market.
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Quick-Service Restaurants
In regards to quick-service restaurant POS systems, the purchase and transaction process is comparable for their retail counterparts.
- A customer walks up to the counter and puts their order
- The worker rings up the order from the POS system
- The client pays for their order
What you do not see is what happens behind the scenes. After an order is placed, the POS system communicates the data to the back-of-house prep stations by means of a kitchen printer or kitchen display system (KDS). This real time communication is what helps ensure accurate and quick support.
Some must-have attributes for a QSR POS are:
- Merchandise prep station mission so food orders go into the appropriate prep station
- Include options for online ordering or delivery direction for additional revenue streams
- An option to add a self-service kiosk to keep lines moving during peak hours
- A digital menu board comprising images or video of your mouth watering menu to encourage clients to spend more
- If your company expand, you'll need the ability to handle multiple locations from one central portal
Full-Service Restaurant and Bar
From servers inputting orders in the front-of-house to printing these tickets in the kitchen for the chef to prepare, your restaurant POS system is the center of your daily operations.
If you are in the market for a restaurant POS, some must-have features you'll want it to include are:
- Table direction for each seat in the house
- The ability to take and handle reservations
- Easily split checks by item, amount, or guest
- The capacity to move checks to a different server or bartender
- Include options for online ordering or delivery direction for further revenue streams
- Have an option to utilize EMV/NFC-enabled pay-at-the-table technology to increase operational efficiency and reduce chargebacks
- Merchandise prep station mission so food orders go to the kitchen and beverage orders go to the pub
- Pre-authorize credit cards to make sure nobody walks out in their bar tab
- Food and liquor inventory management system
Salon POS Systems
Salons and spas are a really hyper-specific market for POS systems because they provide a combination of services and product; therefore your POS system has to have the ability to manage both.
From inventory management to stylist direction, here are some features you will need your salon POS system to possess:
- Online appointment booking so customers can reserve 24/7/365
- A customer relationship management (CRM) so you can monitor services for customers and create customized marketing promotions
- Booth management if your stylists work on a contract basis
What to Look for in a POS System?
Now that you understand what industry-specific characteristics to look for in a POS system let's take a look at some more general features that apply to virtually every kind of business.
Inventory Management
POS systems can allow you to replace manual counts with time-saving and precise automated processes. Some POS solutions can even alert you if inventory is running low and give you the information you will need to issue a purchase order in time, so that you never run from your best-sellers.
Employee Management
It is possible to use POS terminals for worker clock-in and clock-out, requiring that workers authenticate their identity, so you only pay for the time that employees are on the clock. It is also possible to use your POS system to create employee programs, saving you the time of manually creating and adjusting schedules for modifications.
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POS Reporting
The real time reports you can create from the POS system with only a couple clicks can help you maintain a close watch on costs and pinpoint the sources of shrinkage if it happens. POS reports also permit you to monitor key performance indicators (KPIs) that show your company is making progress toward the company goals you set.
Third-party Integrations
Take time to learn if a POS system you are considering integrates with your accounting program, online ordering, customer relationship management, or other business related applications. Integrated third-party applications means information is shared between apps, so you won't have to spend additional time keying in data -- or correcting data entry errors.
How Can POS Systems Work?
Now you know about the various kinds of POS systems and what features to search for let us take a close look at how the hardware and software come together to make an entire system.
Conventional POS Systems
With traditional or legacy POS systems, all of the applications and information is stored on a local server in the company. You make an upfront investment to the hardware and special version of the software -- the latter being the grab. After the software company introduces new features and upgrades (a.k.a a new version), you will probably have to pay to upgrade your version to the latest and best.
Cloud-Based POS Systems
With cloud-based POS systems, POS software is installed on the POS hardware, and your data is saved on a server at a remote location (a.k.a"the cloud") and from the cloud. Saving your company data in the cloud lets you access and manage the trunk of your POS system through the web.
Instead of pay a significant upfront investment to your POS system, you cover a cheaper recurring monthly subscription fee which includes updates at no extra charge.
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Hybrid POS Systems
If you don't need to be utterly dependent online or onsite servers to keep your company up and running, you can opt for a hybrid system that uses both cloud and servers to be sure that you always have access to your POS application and your information.
Mobile POS Systems
Used as a standalone device or as an extension of your countertop POS system, mobile POS systems allow you to turn an iPad or Android tablet into a point of sale device. Mobile POS provides you line-busting capacities that keep lines short and enhance customer experiences.
Kinds of POS Hardware
We have mentioned POS hardware quite a little up to this point, but now it is time to research all the various components and peripherals you will need for a complete POS system. Many POS providers create hardware packages that include all of the equipment you will need to finish your setup.
Cash Drawer
A cash drawer which you can control with your POS system is a must for safeguarding your company from shrinkage or loss that could occur when unauthorized individuals have access to the till.
Receipt Printer
Many clients still prefer paper receipts, so it is crucial to include a trusted printer on your POS system setup. Receipt printers may also give you an chance for an excess touch with customers, by way of instance, to remind them about upcoming promotions or promote membership on your loyalty program.
Barcode Scanner
Scanning barcodes is a faster and more precise way to ring up items. Nobody wants to wait in line as a cashier keys at prices manually. Barcode technology may also help you manage inventory with greater ease and more precision.
Payment Terminal
Your POS system should communicate using a payment terminal for authorizations for debit and credit card payments.
Customer Display
Based on the kind of business you have and where it is located, you might be required by law to have a client facing screen at the point of sale so the consumer can see the cost of the items being rung up.
Contemporary customer-facing displays have vibrant text and images to help engage clients with offers and exclusive promotions. A lot of them are touchscreen and make it possible for you to capture signatures for credit card transactions and allow customers enter their contact information to your customer loyalty program. Consider it as a miniature functional billboard -- you can also sell ad space to local businesses for extra revenue.
How to Purchase a POS System?
Together with the many choices you'll have to make about which sort of POS system you will invest in, you must also provide some thought to how you will buy it.
Point of sale systems are offered either directly in the software company that develops the solution, or through third-party resellers with a relationship with the software company to market their products. Both avenues have their advantages and disadvantages, but the additional benefit of working with a local reseller is that they can supply you with onsite assistance and assistance.
In either case, ensure that you know who will provide support and maintenance, repair it if something goes wrong, and if continuing services will include an extra charge.
The Wrap Up
Now that you know everything there is to know about what's a POS system, it is not a choice you should rush. Based on Capterra's Point of Sale Software Systems User Research Report found that many companies take up to six months to pick their point of sale solution -- and just 1 percent can choose a solution in under two weeks. Take the opportunity to experiment with demos, weigh your options, and make a smart, informed decision.
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