You know that retail management requires a variety of managerial, marketing, and administrative skills. These skills are essential to ensure your store runs smoothly, from making sure there is enough inventory to compiling monthly sales reports.

An effective POS (Point-of-Sale) system can make sure your operations run smoothly. It can be difficult to find the right POS system.

We’ll help you understand what a POS is and the features that you should look for in order to find the right one.

Get ready!

What is a POS System?

POS stands for Point of Sale. It is a shorthand for Point of Sale.

It’s the area around the cash register that customers use to exchange money for products or services. If you have a mobile point-of-sale system, the entire store can be converted into a point for sale. (We’ll discuss this later).

A POS system is the hardware and software that you use to manage your company. It is not a single machine or process. Instead, it is a collection of items that allow you to efficiently process customer-facing transactions and streamline your business processes.

The layout will vary in appearance and functionality depending on the technology you choose, what payment methods you accept, if you print receipts or not, how you record sales and organize your end-of-day bookkeeping and what inventory systems you have for your products.

In the past, POS systems were on-premise. This meant that they used an on-site server, and could only be installed in a particular area. Your desktop computer, cash register and barcode scanner were all at your front desk. They hardly moved.

The cloud was a major technological breakthrough in the 2000s. Mobility was the next evolution in POS technology after cloud-based storage and computing.

What is a POS system?

A POS system allows your business to take payments from customers and track sales. Although it sounds simple, there are many ways to make this setup work.

The POS system refers to the cash register in a store. Modern POS systems can be accessed online, so you can track a customer from wherever you may be. You only need a POS app, and an internet-enabled device like a tablet or phone.

How does a POS system function? It basically works like this:

1. Your customer purchases your product or service. A customer may call a sales associate if they live near a brick-and mortar store. The associate can scan the barcode to check the item’s cost. This step is for online shops. The customer adds items to their cart, then clicks on the checkout button.

2. Your POS system calculates an item’s cost, including sales tax, and updates the inventory count to indicate that it has been sold.

3. The customer pays. To complete the purchase, customers will need to pay with their credit card or debit card, tap card. Gift cards, loyalty points, cash, and gift cards. Your customer’s bank will then authorize the transaction depending on which payment method they chose.

4. This is the end of the POS transaction. This is the moment you make the sale. Once payment is received, you can create a digital or printed receipt and ship the item to your customer.

Why would you want to use a POS system for your business?

POS systems are a great choice for businesses. Here are some common reasons why POS systems are popular:

• Your business can benefit from a POS system. You can have better control of your business operations. The right POS system will let you see exactly what items you have sold each day or month, how many are in your warehouse and how much you made.

• It allows for better planning and analytical thinking. POS systems make it easy to track your inventory and to identify trends in sales processes. They also allow you to analyze sales reports to help you predict future trends.

• It can increase your business efficiency. POS systems are a time-saver for managing your company’s paperwork. It is easier to manage sales figures, orders, and bills. A POS system can not only improve the office environment but also increase the efficiency of daily sales environments through different features like barcode scanners and credit card terminals.

• This makes it easier to communicate with clients. A POS system allows clients to easily collect their contact information while they are making a purchase. This information can be used to generate personalized offers and build client relationships.

The key components of a POS System

Although POS systems use POS software in some cases, not all businesses require POS hardware.

Online stores can sell everything. You don’t need POS hardware to accept payments. If you own a coffee shop, however, you will need a register as well as a credit card reader.

Here’s a list of the most common types of POS hardware that you can use to calculate the cost of your POS system. You need to consider your business and what kind of POS hardware you require.

Hardware components

• Register. Registers allow you to calculate and process customer transactions.

• An iPad or other tablet can be connected to the internet. An alternative to a monitor, a portable device is possible. You can prop up a tablet with a stand to allow your staff members to clock in and check out.

• Card reader. Credit card reader allows customers to securely pay with their credit cards in-store.

• Barcode scanner. Barcode scanner. This scans the item’s details to allow you to ring it up. This can be used to quickly double-check stock levels, price, and other details.

• Printer for receipts. Receipt printer. It allows customers to see exactly what they bought, when they bought it, and how much they paid.

• Cash drawer. Cash drawer. Even if you accept contactless payments you might still need a safe place to store your cash. A cash drawer connected to POS software can reduce fraud by tracking when it is opened.   

Software components

Software components are often referred to as the “backend” (or “dashboard side”) of a POS system. They are responsible for analytics and management functions behind-the scenes. Staff use the front-end interface on a tablet or touchscreen screen. You can access the backend separately via a browser, app window, or on a separate device.

No matter what POS software you use, both the frontend AND backend will be connected. However, there are two ways data can be stored.

On-site	Cloud-based
– Software is installed “locally”, e.g. on your server located on the premises of your shop – You will need to purchase one or more software licenses This software will require manual maintenance and updating. The software is not required to be accessed via the Internet because it is stored in your computer network.	– The system is hosted online. Data is stored on the servers of your POS provider, allowing you to access them from any computer. – Also known as Software-as-a-Service (SaaS), this system is automatically maintained and updated by your POS provider.

There are a few things you should consider if you are excited about upgrading your current POS system. These are the most popular software features that you should be looking for:

• Payment processing. Your POS system must be able process payments. This is the first and most obvious. This includes processing credit and cash as well as any other payment that your business may accept.

• Inventory management. This feature allows you to keep track of all your products. An automated inventory software can connect to your sales data and alert you when an item is low.

• Receipts. Receipts are faster for refund processing because they have a digital or paper trail that is connected to the item purchased. Receipts can also help your business appear more professional.

• Customer relationship management. A CRM tool that is integrated with your POS software will allow you to see the purchases of your customers and when they made them. This information can be used to personalize customer service, marketing, communication, and marketing.

• Staff management. You can monitor the performance of your staff members and see when they are at work. It can be used by your staff to clock in and check out. Some software even allows employees to access certain tasks.

• POS reports. This allows you to quickly see how much you’re selling and how much you’re earning. Clear reports will help you make better business decisions and increase your sales.

• Tipping. Tips can make up a large part of the payment for restaurant and service workers. POS software makes it easier for customers to tip by adding a digital tip at checkout.

You now have a better understanding about POS systems and can choose the one that is right for you. Below are some helpful tips!

Here are 7 things to consider when selecting a POS system that will work for you and your business. 

Know your business type

When choosing a POS system, the first thing to do is understand your business’s structure, size, and nature. You can ask yourself these questions:

• Are you in the service, retail, or food sectors?

• Are you selling products or services?

• How big is your business?

• Are you solely online or do you have a physical, pop up, or mobile shop?

• How do you structure your staffing? What is your staffing structure? Are you fully-staffed, employee-owned or do you work mostly with contractors?

Take a look at your financial situation

Choosing the right POS system is a key aspect. It’s important to have a clear understanding of your budget. You should consider more than the initial cost of a POS system.

• What would you pay for a month?

• Is the pricing fair?

• Is there an additional charge for customizing software or apps by the vendor?

• Is the system a good value for the price?

Take into account ease of use

While most POS systems seem intuitive, they can be very complex. How complex does your POS system have to be to make your business more efficient?

You might also want to think about how easy it integrates into your existing apps. Most importantly, if there is a problem, can the POS system provide high-quality technical support and customer service?

Concentrate on the features that you most need

A POS system can be used to track everything, from employee hours to transactions. Perhaps you only need a digital cash register. It is important to think about what you want from a POS system.

No matter how big or small their business is, there are many features business owners should consider. These include ease-of-use, data storage, and the ability to scale up your system with your business.

You must ensure that your business can scale easily

Your business should not be static. You should consider what your business needs will be in five, ten, and ten years.

Consider how quickly you can develop, and that will help you determine your long-term POS requirements. Take this example:

• Are you able to add features to your POS system quickly?
• What are the costs of upgrading?
• Are you going to eventually have to change POS systems?

Entrepreneurs must always think ahead. These questions will help you make informed decisions.

Refer to other businesses

After narrowing down your options, you can find out which businesses use the same solutions.

Ask for references from companies or ask the community about their POS system. Make sure you’re comparing the software version to which they are using when looking for references.

Request a trial or demo of the POS system

Many POS vendors offer demos or free trials so that you can test their software. This allows you to evaluate the system’s functionality, test new features and explore its benefits.

Keep track of any issues you are having and what you like. You can then share your concerns with the provider to help them address them.

The bottom line

Your POS system choice can make a huge difference in how your business runs day-to-day and how it grows year-after-year. The system will be used by you and your employees every day that you are in business.

Take your time and research. The best way to start is to examine and articulate your business goals and needs.