1. What is a Point of Sale System?
The Point of Sale System (POS) is the place where a customer pays for products and services. In other words, it is the time and place where a retail transaction is completed. A POS is an integrated software platform where real-time analytics and sales reporting tell you which items are selling, when your busiest times are, and more. All aspects of your business transaction activities such as inventory management, customer databases and sales come together for seamless management and monitoring.
The key issue you will have to first identify is knowing exactly what you need for your business because there are many off-the-shelf POS systems on the market and one-size does not fit all. For instance, the POS needs of a restaurant operation could be entirely different from that of a grocery store, even though both are in the retail business. Unfortunately, even given the clear advantages of implementing such a computerized network, an estimated 56% of retail companies still use antiquated methods of bookkeeping such as cash registers or Excel files.
2. The Benefits of a POS for a Small Business
Finding the right POS system for your business is all about knowing your business, the features you need, and asking the right questions of the POS software provider. Most small businesses have a tough time maintaining the accuracy of sales, inventory records and other important transactions. The major benefit of having a POS system in place is automated record keeping and other features that support a business’ activities. It is estimated that by 2021, the POS market will grow by $5 trillion as more organizations recognize the positive impact a POS system has on their business.
- Positively impacts business operations
A POS system offers small businesses detailed updates on daily or monthly sales, inventory levels and, profits made during the period.
- Results in accurate data analysis
With a POS system you can monitor existing inventory and assess sales data so that you can make an informed decision about your business. Using the advanced features of the software, you can be notified as soon as the inventory stocks begin to be depleted at a rapid pace so that you are able to place a new order for stock in a timely manner. It also helps you to improve predictions of future trends in your business operations.
- Leads to increased business efficiency
Because the POS system streamlines the processes by automating employee, customer, and inventory management it helps your business reduce paperwork and administrative tasks, and can minimize billing mistakes. It also frees up your time so that the management team is able to spend more time on other matters. Apart from digitized archiving in the office, there are multiple features in a POS, such as barcode scanners, that can help fast-track performance.
- Optimizes personalized client communications
Small companies using the the POS system can easily maintain details of their client networks and monitor who the most frequent clients are, thus being able to tailor communications accordingly. Elements like personal offers and discounts can help develop a long-term relationship with loyal customers. For business operations that are dependent on retaining customers, informed decisions such can lead to monetary savings and help increase customer return rates as well as profitability. In essence, it helps you to create a better customer relationship with instant feedback.
3. Choosing A POS System
- Do I need a POS system?
It doesn’t matter what kind of company you own, the products you specialize in or the scale of operations; if you are dealing with paying customers, a POS system can make your life considerably easier. Holding fast to old-school ledgers and spreadsheets means you are missing out on additional savings. By embracing a POS you can enhance your customer relationships and develop an efficient process to fast-track operations.
- POS Features
When choosing a POS for your business, there are certain features you should keep in mind to assess the value of the product:
- Sales Reporting: Most POS systems are equipped with this feature. You can review important details about sales transactions related to your business. The key factor which differentiates one POS from another is how the data is presented. A good POS system should be able to create informative and intuitive sales reports with categories such as employees, gross margins, products, etc. It should also have a dashboard feature to allow a quick look at the business’ overall sales performance.
- Inventory Management: A POS system is built to support the easy planning and management of product inventories, so you can track bulk orders and anticipate low stock scenarios. A reliable platform will be able to provide the exact count of items placed in inventory, systematically organize products by their size and color, access details of a product through its unique serial number, and allow you to repeat the past orders of high demand products.
- Customer Management: Taking the time to build a strong foundation in terms of the client base will lead to stronger business prospects and long-term success. The POS you choose should also offer Customer Relationship Management (CRM) features to monitor and update customer information. It should also let you link a specific transaction with a customer profile, track past purchases of customers and save contact details such as name, birthday, address, email and phone number. An email marketing option will let you share product and organizational updates with clients, and tailor information based on contact lists in the system.
- Employee Reporting: The quality of work done by its employees is critical to the success of an organization. Through the POS, you should be able to distinguish between the good performers and those who may need to pick up the pace or which require extra attention (such as training programs or incentives). You may even consider reshuffling a department or team if the sales numbers are unchanged over a longer time. The system also gives you the ability to share employee-specific schedules via email, monitor the number of working hours for each employee, and add new hires to the existing system.
- POS Pricing
- Free Trial
There are some POS providers in the market who offer a free trial period to help you become familiar with their product and determine whether it’s a good fit for your staff in their day-to-day operations. For instance, in the free trial, a business can assign staff members with certain roles to review the feature of the software that is most relevant to their work and ensure that the system does all that is promised.
- Freemium Offer
Aside from a free trial, there are some POS software providers that give you the option of a “freemium” model, wherein you can initially use the free version of their product. Often you will need to upgrade to a premium plan for continued use beyond a specific period of time. Alternatively, some providers will only charge when a transaction is made.
iii. Monthly Subscription
Most standard POS providers have month-to-month subscription plans for greater flexibility, along with a choice of payment processors. This is always beneficial compared to being locked into a subscription for several years.
- Annual Subscription
Initial costs are typically lower if you choose an annual subscription for your POS, versus a monthly plan. Many providers also offer an additional discount for this type of package.
- One Time License
One time license fees can be an expensive investment for certain locally-installed POS systems, but worthwhile for a small enterprise. Costs for this type of subscription typically range between $1,000 and $2,500.
- How Much Will I Spend on my POS?
When deciding how much you are willing to spend on a POS system, consider the type of operations that the software would help you with. The functionality you need will drive the total cost, and the system type and level of customized features will impact its price. The funds you plan to allocate for the POS should reflect the revenue your business could generate with its implementation. At a minimum, though, expect to spend in the range of $2,500 to $6,000.
- Ease of Use and Support
Ease of use and support are essential considerations when finalizing the purchase of a POS system. Two main aspects to be kept in mind are hardware and software.
- Hardware
A POS system can only function as well as its hardware. While it is the most expensive component, it’s also central to improving your business efficiency. For instance, if you are in a retail operation, you may only require components such as a cash drawer, credit card scanner and a printer. However, if you own a restaurant or food truck, you may need additional features such as an expo printer or a scale to weigh out food that is priced by the pound, for example. Data shows that most companies prefer cloud-based POS operations as compared to bulky equipment that runs offline.
- Software
Software is the next important element to assess before making your purchase. Ensure that the POS system offers basic functionality like creating sales reports and managing inventory. Cloud-based platforms are particularly helpful for storing large amounts of data, especially if you are running a hospitality business.
- Inventory Management
- Which Inventory Management Tools Do I Need?
The size of your business operations will generally dictate the inventory management tools you will require. For instance, a small or medium sized enterprise might be content with free versions of the software. If you are an ecommerce business that manufactures its own products, you may want to look for additional features in the management tool box, such as reorder automation, multiple location coordination and materials tracking.
- Which POS Systems Have Good Inventory Management Tools?
Every POS system offers a range of inventory management tools that differ in terms of features and functionality. Here are some popular choices:
- Lightspeed gives customers a choice between a separate retail and restaurant POS with plans that start at $99 per month. Under retail, items can be categorized by size, material, colors, etc. They can also be tagged with serial numbers to track products individually.
- ShopKeep is a cost-effective choice for all aspects of inventory management and comes with a quote-based pricing model. It’s a great fit for small to mid-size companies that are in the retail and hospitality sectors, whether you want to look at the most popular items or receive reminders for low stock.
- Vend provides inventory management that is accessible yet functional. You can easily import a comma-separated values file (CSV) or even barcodes to store records of inventory items. Organizing products is made effortless and customizable with this handy platform.
- Revel offers seamless support for storing large quantities of inventory, including making individual purchase orders, to providing alerts for partial orders or low stock. You can also set up automated functions such as ordering new products.
- Barcode Scanner
This hardware is a basic requirement to track stock and streamline the checkout process for customers. There is the option of getting a USB-enabled barcode scanner or a Bluetooth barcode scanner, provided it is compatible with the POS software. POS providers will typically offer barcode scanners for sale; two of the more recognizable brands are Motorola and Zebra.
- Register Screen
You can choose from several varieties of the register screen for a POS system. A flat-panel LCD monitor, for instance, is more expensive than the standard CRT monitor, but its display is a higher quality and it fits in easily at checkout. Another feature to consider is the touch screen, which is faster for retailer interactions at the counter than a traditional keyboard.
- Credit Card Reader
The credit card reader is used to process credit and debit card payments. Customers generally prefer having options when making a payment; for instance, some prefer to use a digital wallet versus a credit card. Consider adding features like receipt printing or emailing, or making a payment using a virtual terminal. Having a credit card reader that is compatible with your mobile device gives you more flexibility.
- Cash Register
A cash register is a must for accepting cash payments. The important thing to bear in mind is the sturdiness and security of the locking mechanism. The cash drawer should be linked to the POS software, and have enough coin trays as well as slots for added convenience.
- Receipt Printers
POS providers are gradually switching to texting or emailing receipts, but a printed receipt is still the most common option. Receipt printers should be compatible with the POS software and connect using Bluetooth or USB. For a restaurant, consider investing in a kitchen printer that will sync with tickets printed in the kitchen for new orders.
5. Deployment
You should ask the following questions about offline functionality when choosing a POS software:
- Which features are unavailable while in offline mode?
While most people ask which features are available without an internet connection, it might be easier to gauge what is not in offline mode. For instance, the vendor’s sales rep may point out that sales transactions can still be possible but may fail to mention that a credit card charge would not be processed.
- Can I log in when the Internet is down?
This is a make-or-break question with only one acceptable response. If the internet is suddenly unavailable before sales start for the day, you will be unable to carry out any operations until the connection comes back.
- Can I process a credit card purchase without the Internet?
The sales rep might tell you that it’s possible, but you need to recognize that there is a risk in accepting a credit or debit card for services rendered or goods purchased that could later be declined when the system comes back online. To complete a transaction, an Internet connection is generally required; the POS system only stores the card information for later processing.
- Will I have access to the customer database?
This is not always a standard feature though for some businesses it may not matter. However, it would be a useful feature if you want to link a transaction to a customer’s profile as part of a loyalty program.
- Cloud Based POS solutions
Cloud-based POS software are quickly becoming mainstream in a range of industries, due to its budget-friendly pricing, added convenience and easy online access. It leads to a centralized repository of customer and sales related data, and allows staff to view stored information from anywhere in the world, provided there is a reliable Internet connection.
- Installed POS Software
Large businesses generally utilize features in installed POS software because of they have inherently fewer security risks. Such software is installed on-premises and maintained diligently at the site itself. Companies that have significantly invested in the POS infrastructure gain more control of the tool versus a cloud-based alternative.
- Hybrid POS Software
A hybrid POS includes two elements: 1) a local Internet connection and 2) a cloud network to access data. Using both, the system has an integrated approach to maintaining centralized terminals, leading to reduced operational spending and improved employee performance.
- POS Systems Without Offline Protection
Traditional models of the POS system do not have offline protection in the event the Internet is unavailable. Some providers give the option of storing a transaction locally until such time as Internet connectivity is resumed, but this needs to be supplemented by battery backup so there are no interruptions in the process.
Installed POS solutions might be too expensive for certain business operations, but for larger companies that have the required infrastructure, it could provide additional stability when performing transactions on a larger scale. With cloud-based POS systems, businesses can bring down costs considerably and increase overall efficiency; however, a reliable Internet connection is required. Hybrid models combine the distinct advantages of both systems. Ultimately, it comes down to your budget and individual requirements when making a choice.
6. Customer Relationship Management
For a business to succeed and maximize its sales, building a strong foundation via customer relations is fundamental. When a POS system is CRM-friendly, it is geared towards strategically monitoring customer preferences and purchasing histories. Information such as preferred products, personal preferences and contact details will help to improve targeted marketing and hone product offerings in the long run. Improved customer experience often translates to increased profitability. Apart from providing tailored information on customers, a CRM system is also able to provide information on those who are loyal to the business.
7. API Integrations
- What is Application Program Interface (API)?
An API is a series of protocols specific to creating and integrating application software. Its purpose is to help your product or service communicate with other prodcuts or services and to trade useful data, based on the type of integration. If it’s only one-way, then the information is shared with one side; if it’s two-way, then the information interchange takes place across systems, leading to better app development and cost savings.
- Prefab / Standard Integrations
Prefab integration refers to the networks created between the software of the POS vendor and another third party. For instance, the connection between QuickBooks and Vend Systems, which isn’t built by the business itself.
- Custom Integrations
Custom integrations refer to those connections built by a web developer (that you hire) or yourself (if you have the skill set). It requires you to have access to both the POS vendor’s API and that of the third-party software with which you plan to integrate. Some companies are strictly against custom integrations and may assess a surcharge for their permission. Custom integration can be an expensive undertaking, so be prepared for such charges.
- Which is Better?
Custom integrations result in more freedom for merchants, since they can create connections tailored to their needs despite the excessive cost. While initially, the features will suit the requirements, there may be additional expenses in the future necessary to update the functionality. However, this may be worthwhile given the overall value it will bring. Prefab integrations, on the other hand, are considerably limited in terms of gaining insights regarding systems communication. While a prefab integration is much more economical, the onus is on the business to ensure that the integration is fully functional and serves the right purpose.
8. POS Systems w/ QuickBooks Integration
- Integration Methods
In terms of integration methods, there are two ways POS systems and accounting infrastructure can work together:
- Indirect Integration: Some POS systems can export financial records in an Excel file format, which is then manually inserted into the accounting application. This requires extra effort yet offers a way to update your data as and when needed.
- Direct Integration: Direct integration is the best possible method to use POS and accounting software in tandem, allowing the two systems to send across data in real time.
- b) Why Use a Direct Integration with QuickBooks?
Using a direct integration with QuickBooks will result in faster processing time and provide the following benefits:
- Easy to learn: When two different software applications are running independently, it can cause unnecessary complications. Integrating the POS with QuickBooks makes the process easier and allows for the seamless performance of both programs.
- Increased Flexibility: As your business evolves, there will be more updates to your inventory and the kind of purchase orders you get. When you have a new item in stock, the obvious next step is to update your records but, without integrating the POS, you will not be able to do that easily. A direct integration makes this entire process effortless and less time-consuming.
- Accurate Information: Manual ways of bookkeeping and sales management can lead to incorrect calculations. Having a direct integration means it’s fully automated and the risk for human error is minimized.
- c) POS Systems that Directly Integrate with QuickBooks
There are multiple QuickBooks compatible with a number of POS systems from which to choose. For instance, ShopKeep is economical and works with a wide range of merchants—perfect for small business owners. Another option to consider is Miva Merchant, which offers a fast and easy way to transfer information to QuickBooks without the tedious process of exporting and importing files. Toast POS is a POS and management system which specifically caters to the restaurant industry. It has features to fast-track business operations such as unifying the POS, kitchen and guest-facing transactions in one platform. It is also available as an enterprise POS for franchises and larger restaurants.
- d) Conclusion
Many POS systems are compatible with QuickBooks integration but your choice should be based on your specific business requirements. QuickBooks itself has reliable and smart features that address all kinds of accounting issues, making this software a perfect solution for bookkeeping.
- Security
- a) Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS is a globally recognized collection of procedures and guidelines that are geared towards enhancing the security of debit, credit and cash card transactions, and protecting cardholders against any data breaches. Businesses are responsible for ensuring that they have taken the best steps possible to protect their customers against fraud, and that they store the customer’s personal information in a secure environment. These standards are not enforceable by law but laid down by concerned parties as a means of self-regulation.
- b) Where Vulnerabilities Lie
There are certain aspects to consider in terms of vulnerabilities that still exist, despite having PCI DSS compliance. Human beings are generally the weakest link in the security process as a result of simple human error (erroneous or otherwise). Also, companies tend to focus primarily on preventative security measures instead of allocating some resources to a calculated response strategy in the event of a cybersecurity attack. Intrusion detection systems must be in place to block cyber-criminals from exploiting conventional means like acquiring a credit card holder’s personal details.
- c) How to Best Address These Vulnerabilities
Such vulnerabilities can be addressed by creating and implementing a mature compliance procedure, with fail-safes such as a designated individual for managing and tracking PCI DSS compliance, regular data discovery undertaking to keep an up-to-date inventory of data repositories, etc. Additionally, organizations need to focus on honing their investigative capabilities and use predictive, as well as reactive, analysis to narrow down trends in cyber security.
- d) Methods of Attack
There are a few common methods of attack involved. First, accidental breaches happen when the intent was non-malicious, such as an employee inadvertently making a sensitive document available to the public. Another kind of attack is the internal criminal data breach, which typically involves a disgruntled employee or someone who may be susceptible to bribery or extortion. An external criminal data breach is the most damaging, in which case experienced cybercriminals find illegal means to access your data for nefarious purposes, often by use of ransomware.
- e) What You Can Do to Ensure Protection
On a day-to-day basis, there are certain precautions that can be taken to maximize security at the workplace. Backing up the existing data in a secure place, and setting up clear DLP guidelines are a proactive way to safeguard data. Actively tracking any unwarranted use of data and irregular account takeover behaviors can also reduce the risk of a data breach.
- f) Conclusion
Maintaining PCI compliance should be a priority as the initial defensive line against any kind of cyber activity. Organizations must continue to find new and improved ways of protecting customer data and mitigating risks associated with data breaches.
- Mobile POS Apps
- a) Overview of Mobile POS
Mobile POS are typically smartphones, tablets or any other device which works wirelessly as an electronic cash register. Most mobile POS systems allow sales to occur in a quick and easy fashion, irrespective of location.
- b) Pros
A mobile POS is advantageous due to its unmatched versatility and portability. Whether at an event venue or food truck, businesses that need to be mobile find it convenient to complete card transactions on the go.
- c) Cons
While its size is a distinct advantage, mobile POS apps can still be vulnerable to hacking and cybercrime. The mobile POS is also dependent on the battery life of the device, so when there is no power source the device won’t be active.
- d) Costs
The average price of a mobile POS device is expected to continue to drop to around $30 by 2023. This affordable rate will increase its popularity for small and medium sized enterprises looking for layered payment options.
- e) Implementation and Deployment
The mobile POS, which takes up considerably less space than a countertop POS, can be implemented successfully with a steady Internet connection, a mobile application to process the transactions and a card reader. A mobile POS improves the customer experience, generally.
- f) Hardware Requirements
In terms of hardware requirements, any type of smartphone or tablet can function as a mobile POS via a downloadable mobile app. It can also operate as a stand-alone device that is connected directly to the company’s bank account.
- iPad POS Software
- a) Overview of iPad-based POS
An iPad-based POS runs on Apple’s iOS platform. You can download the relevant app to the iPad and link the associated credit terminal from the payment processing company in a seamless manner. The app functionality is useful to keep track of every transaction made and allows you to see different sales reports that can offer new insights on your company’s current sales performance.
- b) Pros
When compared with a conventional cash register, an iPad POS offers a slew of benefits that help you execute business operations in an optimal way. With advancements in the POS industry, an iPad-based POS is no longer a skeletal version of a robust application—it offers a gamut of features from maintaining customer records to tracking monthly sales.
- c) Cons
One of the disadvantages with this type of POS is its utter dependence on a portable device which could be easily damaged. Also, it is dependent on having reliable Internet connectivity, so the system may be targeted by cyber-criminals or could be vulnerable to malware. Moreover, Apple products are not known for their affordability.
- d) Costs
The average cost of an iPad POS would be around $500, which would include the credit card reader, a receipt printer and a stand for the device. There could be additional charges to register the system as well as a fee for each completed transaction.
- e) Implementation and Deployment
Implementation is extremely simple. Besides an iPad, you will require a subscription to a cloud-based POS system that works on mobile devices along with additional equipment based on your particular requirements.
- f) Hardware Requirements
iPads have a user-friendly interface and are considered reliable, as Apple develops every aspect of the hardware and the operating software. They also offer good security as a closed platform, making it less vulnerable to hackers.
- POS for Different Business Types
- a) Retail POS Software
In terms of retail POS software, Square POS is a leading application with updates for retail hardware for all types of industries. Another option is Lightspeed, which is able to track large scale retail inventories. For both offline and online retail, Shopify is another reliable software that offers an intuitive dashboard for varying businesses.
- b) Best POS for Restaurants
If you are running a restaurant, a great POS is Toast. Priced affordably and specializing in US food service operations, it is easy to navigate and offers ordering as well as repayment support for optimal management of business operations. With tech savvy features, it can ease the challenges of handling multiple floor orders and fluctuating inventory.
- c) Best POS system for Bars
Bars require the kind of POS system that can pre-authorize credit card details, oversee a number of bar tabs and monitor inventory stock through orders made. A user-friendly system for this industry is Toast, which provides detailed reports and is cost-effective, with a subscription fee of less than $100 monthly.
- d) POS Systems for Food Trucks
Food trucks often struggle to find a POS that can help them make payments on the go and place food orders simultaneously. Square is a tried and tested POS software that is free and offers an offline payments feature. It also has an easy-to-understand interface that monitors multiple aspects of the business.
- e) POS Systems for Pizza Restaurants
POS systems suited for pizza restaurants must have the ability to monitor sales and organize orders, both at the restaurant and for delivery or takeout. Toast is a perfect fit, with modern systems specially created for various industries at a competitive price.
- f) POS for Coffee Shops and Cafes
In case of café operations, a POS system is particularly beneficial for managing delivery and seated orders, along with tracking customer transactions over time for rewards or loyalty programs. With Square, you can further tailor the requirements regarding marketing sales and inventory, free of cost. Using this on an iPad or mobile device can further support small eateries with improved operations.
- g) POS Systems for Spas and Salons
If you are oerating a spa or salon, the retail POS software should have CRM features and help speed up the billing process through an automated service. Offering a free card reader and payment options via an app, Square is undoubtedly a popular choice for small and medium sized spas and salons for quick appointment bookings and overall business management.
- h) POS for Online Sales
Looking to make a mark online with your brand or want to find a POS that will boost online functionality? Lightspeed is a perfect match for businesses, basing a majority of their operations online, offering 24/7 user support and great software updates. You can also access a wide range of integrations for added features, depending on the industry.
- Free POS vs Paid POS
There are a surprising amount of choices available in the case of free as well as paid POS systems. While some POS providers offer free versions for merchant accounts, they also come with certain limitations unless and until you upgrade to a paid subscription or a “freemium” version. The key is to gain a deeper understanding of which devices will serve your purpose for the POS system you have shortlisted, so that you can budget for any new equipment that may be required.
In case you require some specialty features, such as delivery tracking or managing online orders, the best approach is to pick the POS solution that’s most convenient, before signing up with a credit card processor. If that’s not relevant, you can possibly enjoy a cost savings if you retain a credit card processor before deciding on the POS system.
Final Thoughts
If you had been considering a Point of Sale system for your business and had felt completely lost as to how to proceed, it is hoped that you are now well equipped and cognizant of your many options. Given the wide variety of available POS vendors and software options, and regardless of your budget, you will very likely find one that can fit your specific needs. If the POS vendor offers it, do accept the free trial version so that you will know if it works for your business or not.[/vc_column_text][/vc_column][/vc_row]