Even in a perfect world, running a business is hard work. Between managing employee scheduling, organizing inventory, and researching upcoming industry trends, it’s hard to find the time to focus on your trade. If you own a restaurant, you should be tweaking marketing materials and refining the menu, not manually entering last month’s sales into an Excel sheet.
Luckily, every type of business owner can save time with a Point of Sale (POS) system. A POS system is kind of like a sentient cash register; it’s a software program that enables business owners to customize, perform, and record transactions.
Today, POS systems do more than record the prices of your business’ products and services. Contemporary POS systems can enable you and your employees to accept credit card payments, set up and alter seating charts, get notified when inventory is low, record customers’ purchasing habits, and manage employee time cards.
POS Systems: The Basics
A POS system can look wildly different from one business to the next. A restaurant might have a POS software system that can change menu pricing on the fly, customizes the seating chart, and is backed by a complex network of hardware: terminals, mobile card readers, printers, and eCommerce payment gateways.
But for other businesses, like a beachside surf school, the POS system might be a simple smartphone with a single inventory item: a $90 service titled “1-hour Lesson.”
From hardware to functionalities, let’s break down the things that make a POS system a POS system.
- Industry-specific Software: At its most foundational, a POS system is a software program that enables business owners to conduct a transaction. Basic software is generalized for all industries, but many businesses opt-in to more specialized experiences which include industry-specific features and tools.
- Hardware: Hardware devices make transactions smooth and simple. POS hardware includes any kind of technology you can touch during a sale, including a sales terminal, cash register, UPC scanner, card reader extension, and more.
- Payment Processing: Payment processing refers to both the hardware and transactional services necessary for a business to accept credit or debit card transactions, and is performed by a POS company or its affiliate.
- Analytics, Insights, and Customer Relationship Management (CRM): While you conduct transactions and go about your business’ business each day, your POS system automatically records key information about your sales and your customers. This information can be viewed as data, used as insights, and applied to your customer base with CRM functionality.
- Misc. Features: POS systems can do even more. Here are just a few examples: integrate with business software (email marketing, accounting, etc.); track employee time cards; generate pay stubs; manage product inventory; and set up alerts when an inventory item reaches a minimum number.
When it’s time to choose a POS partner for your business, you’ll want to balance these features—along with pricing and transaction fees—to end with the best product for you.
Feature #1) Industry-specific Software
The software is the most critical component of any POS system, and it’s extremely customizable–both by industry and by business. Even the same POS system software can look wildly disparate in two different stores.
That said, there’s a few commonalities that all POS software systems share:
- Customized product pricing: Business owners can create a unique inventory of products and services at their business, linking pricing details and Universal Product Codes (UPC) to each item.
- Payment Calculation: As a merchant rings up a customer’s items, POS software will calculate the total amount due and any change owed to the customer.
- Payment Validation: Most POS systems send customers a receipt with their purchase, either digitally or in print form.
When we peel back the basics and look at the main functionalities of POS software, it varies greatly from industry to industry.
- Retail: Retail POS software is designed to create and manage inventory. If you owned a grocery store, your POS software system could inform you when your supply of a specific brand of hot sauce is low.
- Restaurants and Bars: POS software designed for the dining industry is custom-built for quick transactions. If happy hour is from 4–6 every night, your POS system can automatically reduce drink pricing for all the relevant tickets.
- Hospitality and Golf Courses: For hotels, golf courses, and similar industries, POS systems are designed for scheduling. If a party makes a tee time for a date six months in advance, your POS system keeps track so you don't have to.
Industry-specific features and tools are designed to make your workday easier and more efficient. When shopping for a POS system, be sure to ask POS retailers which features are in place for the unique needs of your industry.
Feature #2) Hardware
If you plan on conducting transactions in a brick-and-mortar storefront, you’ll also want to investigate what kind of hardware you’ll need to incorporate into your POS system.
Some businesses can get by on the bare bones, such as a smartphone to run a POS app with a credit card reader extension. Other businesses might require a more traditional setup that looks something like this:
- POS terminal: Usually a computer, monitor, or tablet, the POS terminal is the command post of your business. Your terminal is responsible for running your POS software, allowing you to conduct transactions, record customer information, and take payments.
- Credit card reader: If you’re going to accept credit or debit at your business, you’ll need a card reader of some kind. Contemporary card readers accept credit cards or mobile payment apps that swipe with a magstripe, insert with a chip, or tap using Near Field Communications (NFC) technology.
- Receipt printer: Although many customers now accept digital receipts, you’ll still want to be able to offer print receipts. Many receipt printers are built into credit card reader tech.
- Cash register: Store and protect your earnings with a cash register that responds to the inputs of your POS system.
- UPC Scanner: Most POS systems are designed to automatically ring up scanned items. As most products are sold with a UPC right on the packaging, a UPC scanner is a must for speedy transactions.
When choosing which POS system works best for your business model, you’ll want to keep your hardware needs top of mind. Ensure that your POS hardware fits your needs, and nothing more—why pay for an entire POS terminal when all you need is a smartphone app?
Feature #3) Payment Processing
Even though POS systems and payment processing services are inextricably linked, they are actually different products and services. Whereas a POS system allows you to conduct a transaction, a credit card processing company will provide the back-end services and hardware you need for that credited money to end up in your business’ bank account.
In other words: a POS system lets you conduct and record a sale, whereas a credit card processing company lets you accept the credit card payment in the first place. A single company may offer both POS and credit card processing services, making it all the easier to implement these essential services into your business.
Alternatively, you could decide to purchase your POS system from one company and your credit card processing services from another. Don’t let this secondary approach scare you: most POS and credit card processing services are designed to work in tandem with each other, meaning you can mix and match services without a headache.
Let’s break down both the back-end services and hardware a credit card processing company offers:
- Back-end services: Your credit card processing company works as a mediator in the chain of communication that is involved with every single credit card purchase. To learn more about this process, check out our article detailing the credit card processing chain.
- Hardware: Credit card processors sell in-store, mobile, and eCommerce credit card reading gateways.
Interested in credit card processing companies? Check out our list of the best credit card readers on the market.
Feature #4) Analytics, Insights, and CRM
POS systems collect a lot of data. Every time you make a sale at your business, your POS system can record what was sold, how much was sold, who sold it, at what time of day it was sold, and even to whom it was sold. Thanks to this detailed record keeping, most POS software offers advanced analytics for tracking sale trends, Customer Relationships Management (CRM) information, and additional insights.
Let’s take a look at the calendar function, a common feature. Most POS systems will track when an item was purchased. When you compound that data over several months or a year, you can start to see a fuller picture. If you notice that you sell more lasagna entrees in January and February than any other month, you might consider shifting your menu to include more comfort-food favorites in the wintertime.
With a CRM, all you have to do is accept a customer’s email or phone number—along with their name—to gain access to valuable marketing avenues. CRMs allow you to send marketing emails, sales notifications, and other offers directly to your new and returning customer list, making it more likely that they stop by and make a purchase.
Further, CRMs allow you to personalize your sales data. If you have a customer who makes the same purchase on a regular basis–say, anniversary flowers every August 5th–you can identify this trend and take advantage of it, automizing an annual marketing email to drop into their inbox every August.
Feature #5) Inventory, Employee Management, and Bonus Functionalities
POS systems can also keep track of the numbers and data points that sometimes fall through the cracks.
Inventory management features make restocking all the easier: instead of having an employee keep close track of the units remaining at your store, your entire inventory can be recorded in your POS system.
You can even track employee time cards. Most POS systems will have a time card function, allowing employees to punch in and punch out from day to day. When it's time to send out biweekly or monthly paychecks, all it takes is a peek at the POS to see what you owe.
Pricing
POS system pricing can vary greatly by company, industry, and hardware selected. When choosing a POS system for your business, keep these price points in mind:
- Monthly subscription: To use their POS software, most companies will make you pay a set fee per month.
- Transaction fees: If you hire a credit card processor, they will typically charge a percentage of every transaction you make.
- Hardware: Although some hardware is thrown in for free, additional terminals, card readers, and other tech will cost a one-time payment at market price.
Find the Right POS System for Your Business
Ready to organize and conduct sales at your business? To cut down on research time, start with our list of top-rated POS systems:
Happy shopping!
