- In addition to checking out customers efficiently, POS systems can be used to collect customer contact information, track inventory and generate sales reports.
- POS systems automate the checkout process, track sales, and inventory, and can often integrate with your other business applications, like your accounting software.
- Some POS systems can help you manage both your online and brick-and-mortar sales channels.
- This article is for small business owners who are interested in how POS systems have improved in the past few years.
Point-of-sale (POS) systems are advancing, providing businesses with greater flexibility, control and intelligence than ever before. Businesses have moved from traditional cash registers and stationary credit card readers to tablet and cloud-based POS systems. This shift in technology not only provides businesses with additional features but also allows businesses to keep all reports and transactions in one place.
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What is a POS?
In business, POS stands for point of sale. The point of sale is the location and instance at which a transaction occurs. This doesn’t mean just cash registers – it can include online carts and checkouts, too. Payments made using a smartphone or tablet equipped with a card reader also qualify, as do transactions made on these devices via QR codes from payment services such as PayPal. The point of sale is also typically where sales tax is calculated and charged.
Key takeaway: The point of sale is where sales tax is calculated and charged, money is accepted, and sales are finalized.
The benefits of a POS for businesses
The rapid growth of digital technology in the 21st century has expanded point-of-sale technology from just a sales portal into comprehensive payment processing systems that often integrate with other business tools. These POS systems have the following benefits for businesses:
- Automated sales processes. The most obvious benefit of POS systems is that they make transactions faster and easier for both you and your customers.
- Sales and inventory tracking. POS systems track all of your transactions and thus give you insights into your daily revenue. Some systems include inventory-tracking capabilities through which your stock counts automatically update every time a barcode is scanned into your POS.
- Card-reading capabilities. If you’re running a storefront and don’t have space for a large cashier, mobile POS systems can help. Many POS systems convert your smartphone or tablet into a POS for accepting credit card payments – just connect your card reader to your device, keep your POS app open and when prompted, ask your customer to swipe, dip, or tap their credit card to complete the transaction.
- Integrations with other platforms. If your POS can integrate with your company’s other software platforms, such as its accounting services, you can better understand your cash flow. As such, you’ll have an accurate picture of how much cash your company has on hand due to sales.
Tip: A POS system can streamline the sales process, track sales and inventory, and integrate with other business software you use.
How POS systems are changing the way businesses operate
POS systems have moved beyond processing sales and are becoming an integrated part of the entire business operations ecosystem.
Restaurant cloud-based POS systems like TouchBistro allow users to split checks, quickly search items on the menu, track server performance, process online and tableside orders, report trends of voiding or comping items for guests, track what menu items are selling well, and even train new employees.
Retail mobile POS systems like Square allow businesses to transform iPads and smartphones into a POS system using Square readers and stands. Its first fully integrated system, Square Register, lets you “track sales in real time, manage inventory, build a customer directory and have customers pay intuitively.”
Here are five ways POS systems are changing and how your business can jump on the cutting edge of POS technologies.
1. Shared commerce
By taking its operations online, a business can grow exponentially. Previously, businesses had to run data from their e-commerce platforms and their physical POS systems. To run a report, you would have to import both results into a spreadsheet, accounting system or other reporting software. However, because of shared commerce POS systems, businesses can save plenty of time by automating the process.
One e-commerce solution is Shopify’s POS system. It syncs with the Shopify app for iOS and Android to track both online and offline transactions. Instead of managing two sets of inventories and payment systems, the Shopify POS synchronizes financial and product information in a centralized dashboard. This way, you have quick and easy access to real-time data and customer insights across two sales channels, without the hassle of running reports on multiple systems.
2. Mobile POS
Businesses should consider accepting mobile payments, as customers are shifting away from cash.
With mobile POS systems, businesses can accept credit card payments from anywhere with an internet connection, while customers have more autonomy over how they pay.
Depending on the system, businesses don’t need heavy equipment overhauls or complicated staff training to start accepting mobile payments. Mobile credit card processing services (like Square and PayPal Here) use a credit card reader attached to a smartphone or tablet with the necessary mobile app, while mobile wallet providers (Google Wallet, Visa Checkout, Apple Pay) and loyalty mobile apps (Starbucks, Daily Deals) allow customers to pay directly from their smartphones or by using a POS scanner to read barcodes or QR codes on their screens.
3. POS + CRM
Whereas previous POS systems could only provide basic data regarding customer behavior (if they provided anything), POS/CRM integration makes it possible to see which customers are driving your sales and whose loyalty is worth pursuing.
Online CRM and invoicing software Sellsy is one such solution. With its POS integration, businesses can create client records, CRM tasks and email marketing lists straight from their POS tills.
Another example is Revel Systems, an iPad POS solution with CRM capabilities. Its features enable businesses to collect all types of customer data from POS transactions, such as names, billing and shipping addresses, emails, loyalty program membership details, and order histories. The software then helps businesses organize, synchronize, and distribute this information to different departments – sales, marketing, customer service, and technical support – to improve the customer experience. Related Content: Guide to CRM-Enabled POS Systems Helping Your Business.
4. Big data for SMBs
Big data isn’t just for big companies with extensive intelligence budgets. Small businesses now have affordable access to powerful data right at their fingertips – from their POS systems.
For instance, ShopKeep, a POS software tool for small businesses, offers robust data-gathering and reporting features that give you insights into how your business is doing. Detailed reports include inventory and volume analysis, top-selling items, revenue and profit margin optimization, and staffing needs.
POS data intelligence technology goes beyond retail. Toast, a POS system for restaurants, simplifies “restaurant operations by combining POS, front-of-house, back-of-house, and guest-facing technology on a single platform” while also allowing restaurant owners to “monitor restaurant sales, labor costs, food costs, and more in real time, at home, and on the go with powerful reporting capabilities.”
5. IoT and POS security
The internet of things (IoT) – the interconnectivity and communication of devices, networks, and physical objects over the internet (talking refrigerators and smart homes) – makes it possible to connect POS systems to front- and back-end processes like CRM, accounting and inventory management. As such, POS systems are vulnerable to hacks and data breaches.
In 2014, the Department of Homeland Security’s United States Computer Emergency Readiness Team (US-CERT) issued an alert and best practices guidelines stating that cybercriminals had been targeting POS systems to collect consumer and credit card data by distributing malware through internet-connected devices. Even though that security report is six years old, businesses must stay up to date on their security systems and understand how to combat potential threats or attacks.
US-CERT recommends protecting POS systems by using strong passwords, ensuring you have the latest POS software updates, installing a firewall, using antivirus programs, restricting unauthorized internet access (such as for purposes other than POS transactions) and disabling remote access to POS systems. Furthermore, your POS system provider should have the proper security and compliance in place as part of your service-level agreement.
Additional reporting by Max Freedman and Sara Angeles.