What is a Point of Sale System?
In the simplest terms, Point of Sale Systems are the computerized retail management system which allows a consumer to purchase his or her goods or services, whether in a physical store or through a digital interface (like an eCommerce store).
Literally, the point of sale is that moment and location when the customer pays for what he or she is buying.
So, the system for this point of sale, is what manages the inventory of the items being purchased and the money exchanging hands.
For those of you who are new to the world of business, the term “Point of Sale System” may not be something you are familiar with. Which is totally OK! You never needed to know before. But now, it’s very important to familiarize yourself with what POS systems are and what role they play in your business.
Every transaction, regardless of where it is conducted, has a point of sale. The point of sale is that special time when your customer has finally found what they want and are ready to purchase their goods.
For example, shoppers peruse through racks upon racks of merchandise. They finally find the perfect set of slouchy boots and floral leggings they’ve been looking for, or those new oxford twin tips and suspenders with the mustache motif pattern. (Wink.)
The last part may only apply to a certain hipster demographic, but all the same, your customers find what they are looking for, out of want or need, and make their way to the front of your store, regardless of the type of business/product being provided.
For those of you who have an online business, this could be referring to the time when your customer clicks on “shopping cart” or “buy now.”
They either find the cash-out stand or are digitally transferred to what is called a “virtual terminal.”
In brick and mortar businesses, the cash out counter typically looks the same. You have the counter where your customer can place their items, you have the clerk or salesperson behind the counter, and you have a computer with a screen, scanner, printer and cash drawer.
The physical POS system is typically the same regardless of the business, with some small variations. Most traditional POS systems have a screen or digital display (sometimes a touch screen display, sometimes just a digital readout) with which the salesperson or clerk can view the items the customer is purchasing as they enter them into the computer system.
The way they do this is by using a scanner to scan the barcode on each item. This enters the item into the system for purchase and adds the price of each one to the customer’s total. These scanners come in different forms.
Some are attached directly to the POS machine via a cord, some are wirelessly connected to the system and sit in a charging “holster” when they aren’t being used. There are others that are simply a scanner built into a counter (like a self-checkout stand) that use a laser reader which reads the barcodes of items passed over it.
There is also what is called a “cash drawer” usually attached to the bottom of the POS. You can probably guess the function of the cash drawer, right?
It’s where all the mullah is stored! Cash drawers keep the cash your customers pay with safe and secure during operating hours.
The drawer is activated/opened when the salesperson enters the amount of cash being handed to them and they need to make change for the customer. A little bell rings and the drawer slides open. There are slots with bills and change in the drawer and your clerk retrieves the correct change for the customer and hands it to them.
These drawers are most often heavy duty steel with a heavy duty lock on them which only the person with the master key can open manually.
Many traditional point of sale systems come with a printer for printing receipts for customers, as well as sales reports and time punches.
Those are the basic hardware items of a POS system. Depending on what company you purchase your POS system from, you will be provided with many “back office” functions as well. These are especially useful in helping you keep track of your records, sales, time punches, inventory, etc.
Obviously the more you need, the more you will end up paying for your POS system. Don’t confuse the “cheaper” option with the better option when it comes to your Point Of Sale system!
You need something that won’t break your bank, yes. But sometimes investing the money up front to implement a pricier system that will fulfill all your business needs for years to come will end up saving you money in the end. The more corners you cut, the more it could potentially cost you.
There are still some businesses that use old-school cash registers with the little digital readout and their neon green digital numbers. While they may be “saving” up front by not spending money to upgrade to a more modern POS system, they are losing money ultimately because they don’t have the same back office capabilities that modern POS systems come with.
They end up spending a whole lot of extra time performing those back office functions manually, utilizing people and resources that could perform other, more useful functions. While there are some operations that require manual processes to complete, many of them can be condensed into a more efficient digital process.
This can be said of so many different aspects of your business. Your POS system can help you keep track of your inventory, which we all know is extremely important!
When you receive a shipment, you can scan the invoice into the system, or physically scan each item into the system. When that item is purchased by a customer, it makes note of the sale and when you go to fulfill your orders the next time, you will see that you need to order more of that item.
This is where your sales data tracking function becomes very important. You can track your sales of your inventory and order more of the current “hot items” by simply checking your sales report. Having a digital record of these items cuts away the need to perform a physical count (and waste extra time/manpower doing it).
Several modern Point Of Sale systems automatically order new inventory for you when it reaches a certain predetermined threshold. Talk about a time saver! As well as saving space in your brain for other, more important activities… like spending time with the family.
The accounting functions that many POS systems come equipped with are extremely helpful when it comes time to balance your books. Tax season is no business owner’s favorite time of year, that’s for sure!
As far as your staff is concerned, you can also keep track of their time punches with your POS system. Plus, many also come equipped with additional Human Resource functions.
Your employees can actually clock in and out of your POS system. When they arrive at your business ready to work, they simply enter their employee number into a “clock in/out” function on the POS screen.
It adds their “time in” punch and records their “time out” punch when they clock out and go home for the day. This eliminates the need for a written record of time punches as well as the need for a punch clock. It also eliminates the possibility for an employee to “fudge” their time in/out. It’s all digital.
Now, some POS systems are designed better than others, just so you are aware! As stated earlier, the “cheaper” option isn’t always the option for you or your business. More often than not, the “cheap” option could just be called what it is: a bad option.
The modern version of a POS system is ever evolving. With most things turning the way of digital, Point Of Sale systems are no exception.
Consider, for example, the rise of Apple Pay and Google Wallet. These allow people to pay for goods and services without having their credit cards present!
It’s a “touchless technology” that only modern Point Of Sale systems can handle.
You will also find a lot of small “mom and pop” type shops have gone the cost effective route of using POS software enabled on their smartphone and tablets.
These digital software POS systems perform all the same functions (plus some!) of a traditional POS cash register system. They have external card swipers (called dongles) and connect wirelessly to a printer or other pieces of hardware.
Most of these POS systems (depending on the software) give your customers the option to have a receipt emailed to them, hence saving your business money otherwise spent on receipt paper. Of course they often still have the option to get a receipt right then and there too.
A point of sale system, as you can probably tell by now, is so much more than just the time and place and physical machine your customers use to pay for the goods or services you provide them.
The point of sale system encompasses a plethora of business functions that are extremely useful and important for your business to keep up with the competition, and to stay current with the ever changing landscape of POS systems and their functions.
By this point, you are hopefully feeling a little more familiar with what a Point Of Sale system is and some of what its primary functions are. While there are other functions not mentioned here, we’ve covered most of the essentials at least.
If you still have questions about Point Of Sale systems that weren’t covered here, please, give us a call at RedFynn! (888) 510-9871.
We’re happy to speak with you and answer any questions you have.
We supply POS systems (we kind of think they are the best…) and have all the answers to any of your questions.
We’re also happy to talk with you about any other questions you have about running a business, including the best merchant services out there (and how they work), instant capital, loyalty programs, gift card programs, and much, much more.
Our focus is, and always has been, on business intelligence, efficiency and growth.
Talk with you soon! (888) 510-9871