Thanks to digitalization, changing lifestyles, and customers’ preferences, a retail business encounters newer challenges every day. To ensure you remain on top of your game it is important to have your backend operations streamlined and running smoothly.
The level of administrative, management, and marketing skills of a retail business decide how well it does in the current competitive market. Retailers need to implement changes that make them stronger and more managed to tap into newer opportunities while maintaining the existing pool of customers. Point of Sale Machine proves an important tool to contribute to this effort. Implementing POS software offers retailers an opportunity to utilize resources optimally while managing customers and increasing profits.
In this post, we have explained what a POS machine is, how it works, and its benefits for retailers and restaurant owners.
What is POS Machine?
POS is an abbreviation for Point of Sales which refers to the place where the customer and retailer exchange money as a payment for purchased goods/ services. Also known as Point of Purchase, the POS processes the payment which is the price of the goods along with payable taxes. POS Machine is modern equipment that makes transactions easier, quicker, and more accurate. The machine comes with POS software that enhances the efficiency of payment processing by offering invoicing, inventory, and a wide range of payment acceptance options in one place.
Unlike the conventional cash collecting machines, POS Machines not only process the payment but also record the data of the customer along with transaction details, manage inventory, compute taxes, and also offer VST- compliant invoicing solutions. The features of a POS machine can vary based on the developer’s discretion.
Key components of POS Machine
POS systems are made of two key components: POS Software & POS Hardware.
POS software works on both the front end and back end. The front end processes the payments while the back end is focused on reporting, inventory management, and related administrative tasks. Commonly front-end part of the software can be accessed through a smartphone, computer, tablet, or iPad whereas the backend is often a web-based application that requires a login from a desktop.
Based on how a software stores data, there are two types of POS Software choices:
On-site software solutions have limited capacity when it comes to storage space and data security, On the other hand, Cloud-based POS software comes with better integration ability along with features and cost-effectiveness.
POS hardware is a combination of components that collectively enable a retailer to make front-end sales operations smoother. depending on the operations, every retail business can choose a POS Machine with the desired set of POS hardware components. Usually, POS hardware gears include:
- Interface: This is a device from which the retailers access the POS software. It can be a desktop, laptop, mobile phone, tablet, or more. Modern POS systems come with exclusive POS interface machines that are more striking in looks and functionality.
- Printer: A printer is a key component to process payment receipts.
- Barcode scanner: It is a handheld tool that scans the barcode on products and record data to maintain inventory levels and reports.
- Card Swipe machines: POS system allows retailers to accept payment through, multiple modes, and the most popular mode of payment is by card. The swipe machine is connected to the system and processes the payment smoothly when executed through a debit/ credit card.
HOW does POS System work?
In layman’s language, a POS System is used to calculate the total prices of the items purchased by a customer and accordingly process the payment. The inventory of the store/ retail outlet is accordingly altered and maintained automatically at all times.
There are 4 steps in a successful POS transaction:
- Customers buying a product
Once the customer decides what he/she wants and the items are scanned using a barcode scanner to check the price of the items to generate a bill.
- Calculating the price of the product/s through POS
Once all the items are scanned, the POS system calculates the total amount payable, this is when all the applicable taxes on the purchase are calculated and a final billable amount is generated on the POS. At the same time, the POS also alters the inventory, marking the items as sold.
- Payment by the customer
To complete the purchase, a customer offers to pay with a choice of payment mode which includes car payments, online transactions, cash payments, or UPI transfers. The POS processes the payment based on the mode.
- POS transaction processing
As soon as the payment transaction is successful, a receipt is produced which can be digitally sent to the customer or can be printed as a transaction bill. The inventory changes are now saved.
Right from offering g insights on the availability of items in the store to the salesman to calculating the price and creating an invoice as well as making the necessary changes in the inventory, a professional POS system does everything.
Core functions of a POS system
Feature-rich POS systems make retail operations stronger. There is a wide range of POS machines available in the market (both with and without the software) for retailers to choose the one that best matches their requirements and nature of business. POS system performs some core functions at a retail store/ restaurant, which include:
- Payment Processing
POS processing is the central function of a POS system. Depending on the software and features, a POS system can process payments in different ways including debit/ credit card payments, UPI transfers as well as online transactions. Modern POS systems can process payments through all modes of payment available.
- Transaction Management
A credible POS covers all three aspects of transaction management: managing an inventory database, issuing receipts, and customer tipping. POS systems make transactions speedier, quickly calculating the bill amount and processing the payment to relieve a customer faster. The entire checkout process can be streamlined and made short as cashiers have access to inventory and accurate accounting features.
Point of Sales machine can track sales and other important business metrics. With handy data at their disposal, businesses can determine profits and the overall performance of the store. The reporting feature is strong and aids in making more informed decisions. Businesses can quickly track fast-selling items, margins, and customer data on monthly basis.
- Inventory Management
For product-selling businesses, the inventory management feature of a POS is a must-have. Right from managing the inventory to tracking inventory levels after every purchase and raising alerts on depleting inventory levels beyond the set limits, a POS system does it all. Advanced POS systems even come with an option to raise automatic purchase orders as per the set details.
- Customer management
Customer management allows you to establish a closer relationship with your customer; boosting sales with repeat purchases. You can manage customer data, generate email lists, run loyalty programs, and implement discounts and sale campaigns easily through a POS system.
What to look for when buying a POS machine?
There is a wide range of POS machines available in the market based on their features. However, there are some key features that you must look for when buying a POS machine. This list of features includes:
- Integrated payment processing
- Multichannel inventory management
- Cloud-based application
- Multi-store management
- User-friendly interface
- Ease of set-up
- Centralised reporting system
- Order management
- Add-ons and applications
These are the features that you must look for when buying a POS system, no matter the size and type of your business.
The benefits of using a POS machine:
POS systems, once limited to administering transactions, today offer a wider range of functionalities. The benefits of these modern POS solutions vary in nature and extent for different businesses. Some of the most prominent benefits of using a POS machine include:
- Hassle-free billing system
You can eliminate inaccuracy, lack of consistency, and customer-service gaps with a POS system. The billing process is made smarter and quicker by a POS which means you can handle more customers in a limited time while delivering an enhanced customer experience.
- Real-time sales data analytics
The reporting and analytical components of the POS system make your decision-making strong and efficient. You can have access to your store data from one single point and generate profit and loss, inventory, as well as tax, reports easily. Some core reporting options include Online and retail store sales, Sales data over time, Sales by an employee, Sales by channel, Sales by product, Number of orders, and more.
- Multi-faceted payment acceptance
Not only can you accept payment in different modes but also from any geographical location. All you need is the right POS machine paired with advanced POS software.
- Overall organizational efficiency
When the sales function is simplified, it can have great effects o the store organization, you can focus on the sales figure and make important decisions like bringing in new inventory, expanding the store’s bandwidth, and even expanding the business.
POS machine is a one-point solution for retail businesses to make store operations more efficient. Depending on the features, a POS machine can take complete charge of every sale transaction and save valuable time and resources. Every business must invest in a POS machine and bring efficiency to their business.