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In business terms, POS means Point of Sale. A point-of-sale (POS) system is defined as the device used to complete a sales transaction and is a combination of POS software and hardware. The device can be anything from a computer, tablet, or even an iPad used to conduct sales. To see different examples of POS systems, click here.
POS software is the software application that powers your point of sale system. It’s the primary tool you use to process payments, store data, manage business functions, and drive your company’s growth. Modern-day point-of-sale software is an integral component of any business and increases efficiencies for restaurants, bars, retail shops, and online stores.
While there is still so much uncertainty concerning the coronavirus pandemic and how it will affect the overall retail industry, the National Retail Federation is still forecasting growth of 3.5 and 4.1 percent to more than $3.9 trillion in 2020. As more retail and restaurant sales move online, online sales are expected to grow from 12 percent to 16 percent. Powering this growth are the advancements in point of sales technology.
Research suggests that adding capabilities to current POS systems is the top priority for small business owners, especially during these uncertain times. POS software will continue to play a significant role in the retail and hospitality industry moving forward – it’s the most easily adjustable (updatable) component of a POS system.
As POS software continues to offer more to business owners, upgrading your POS system is becoming a cost-effective way to increase business. It’s now easy to access custom software features and functions that can help you take your small business to the next level with features like online ordering and contactless payments.
In this guide, I’ll be taking an in-depth look at point-of-sale systems, their uses, their core software and components, and how they can ‘make or break’ your business. Choosing the right point-of-sale product can drastically impact your business’s efficiency. If you’re still using a cash register, you need to read this article and learn why it’s time to up your game.
What Does a Point of Sale (POS) System Do?
Now that you have a basic understanding of POS systems, it’s time to take a closer look at what they do. In most cases, if someone is referring to a POS terminal, they’re referring to the software interface and hardware of a point of sale machine. The primary purpose of the core POS terminal is to calculate item totals, process transactions, increase efficiency, and record the information from the sale.
But a modern-day POS system offers much more than just transactions; they also help you streamline various aspects of managing your business. Advanced software also provides inventory tracking, item imports, menu building, staff management, data and sales reporting, customer management systems, and promotions management to keep customers coming back to your restaurant or retail shop. The features will vary, depending on the POS company that you choose for your environment.
Regardless of what industry your business operates within, a POS system’s primary purpose is to process transactions and streamline the exchange of goods or services. It’s a useful tool that helps you keep track of the core components of your business.
See Example of a POS System
Now, let’s take a look below at the different types of POS systems.
Types of POS Systems:
Many of the top POS providers offer custom point of sale software and hardware to different types of businesses. Let’s take a look at five common types of POS systems:
1. Restaurant POS Systems
If you own or are starting a new restaurant, you’ll need POS software to process orders and transactions. While you can do both functions with a conventional point-of-sale solution, you’ll need additional restaurant-specific features to run your restaurant effectively.
Just like when you purchase all the necessary kitchen equipment for your restaurant, you also need the proper point of sales software with features that allow you to print to the kitchen to speed up orders. No matter what software you choose, it’s imperative that it’s reliable and under warranty to keep your business running smoothly.
The latest and most advanced POS systems, such as Harbortouch, offer a range of restaurant features. Whether it be building custom menus, creating restaurant outlines for reservations, or keeping track of specific ingredients, there’s a whole host of restaurant features available to business owners.
It’s also crucial that your restaurant management software can accept online orders and these essential features. You may also want the ability to track and manage reservations; this gives your host or hostess the ability to improve seating efficiency and keep customers happy.
Many top POS solutions also allow you to track staff metrics, such as hours, performance, and other critical data points. In many cases, you can even process payroll through the application.
2. Bar POS Systems
If you own or manage a bar or nightclub, you understand the intensity of your peak period. It’s essential to have point-of-sale system that can handle the pressure of serving hundreds of clients throughout the night. Fortunately, some of the top POS providers will offer bar-specific features that help bar owners improve workplace efficiency.
Bar POS software like Harbortouch Bar & Restaurant will also enable you to perform transactions in a high-pressure, fast-paced environment. Users can open tabs, split bills, process transactions with credit cards, offer happy hour specials, and more.
It’s also essential to look for a system that offers drink recipe descriptions, express check-out, customer tracking, and other premium features. I prefer software for bars that allow you to track inventory; it can be hard to track drink inventory without an extensive inventory system.
3. Retail POS Systems
If you manage a retail business, you’ll be pleased to know that your industry is the primary focus of many top providers. Choosing the right retail POS software can drastically improve efficiency in your retail company.
The best POS systems for retails environments allows users to bulk import products using external files. You should also be able to monitor inventory, input variations, import product photos, offer discounts, track customer profiles, issue gift cards, provide purchase orders, and more.
Make sure that your POS application is compatible with product scanners. Scanning barcodes can help you drastically increase efficiency in your workplace. Platforms like Harbortouch Checkout can accommodate this feature.
Another crucial component to keep in mind is eCommerce. It’s essential to use a platform that offers eCommerce features if you want to expand your business online. If your software doesn’t have in-house eCommerce features, it should allow you to integrate with third-party eCommerce platforms for online sales.
4. Small Business POS Systems
If you are a small business owner or a Franchise, you have many options to choose from when you are shopping for a new point of sale (POS) system. There are a variety of companies competing for the attention of small business owners around the country.
Many of them offer excellent tools that can help you process transactions and record your data. Depending on your business’s requirements, you may want to consider a tablet or mobile POS system.
Mobile POS systems are perfect for small business owners who need to take their application on-the-go. You can process transactions around your store or even bring your point of sales with you to an outside pop-up-shop.
Either way, analyze your business and its core requirements, the best small business POS system to use will depend on your specific niche. A coffee shop will require different features to a retail outlet. Just make sure that you can track inventory, manage your team, process transactions, offer promotions, and accept credit card payments.
5. Salon and Spa POS Systems
Salons and spas have a unique set of software requirements — you can’t use a traditional POS platform when you manage this type of business. Spa or salon managers should have access to appointment bookings, customer profiles, price-sets for different hairstyles, retail features for store products, employee management features, and other specific requirements.
If you want to offer the best possible customer experience to your clients, it’s essential to use an application that can save their preferences — this can help you provide consistent service to regular visitors. You’ll find that many top salon and spa solutions, such as Harbortouch Salon and Spa, can also be used for other business niches, such as massage parlors, tattoo shops, fitness clubs, and more.
Now it’s time to take a closer look at the core components of your POS machine: Software and Hardware.
Software Components of a POS System
As with all modern technology, the software behind your POS system will dictate its core functions. All the ‘bells and whistles’ or features included in your platform is based on the software you choose. In some cases, POS systems are ‘software-only,’ so you’re expected to source your hardware to install the POS program.
The method for downloading and installing the software will depend on the provider. In some cases, it will be as simple as downloading an app to your tablet or iPad. In other cases, the installation process may be much more extensive.
The majority of new POS software products store information ‘on the cloud.’ While it will keep a small amount of data installed on its hardware counterpart, your POS app will most likely send the bulk of your reporting data to the cloud. Utilizing cloud data allows the app to synchronize with other terminals and provides you with offsite access to the system.
POS software’s core component is the ability to calculate the total price of items and process transactions. However, the more feature-rich point of sale software will also allow you to input products, images, descriptions, pre-set prices, and a range of other elements. For restaurant applications, you’ll also be able to build menus and outlines for the floor of your restaurant, as an example.
On the backend of the software program, you will likely have access to all your reporting data. Here you should be able to track sales, staff performance, item popularity, trends, and other metrics. You should also be able to import products, menus, and other POS elements from an offsite location. The backend of the latest cloud-based software is one of its most beneficial aspects.
Let’s take a look at some additional software components that you can expect from various industry leaders:
- Inventory Management: Regardless of whether you’re operating a retail or hospitality business, tracking inventory is critical if you want to manage your business. Leading POS software products will allow you to track inventory and set alerts for when you’re running low on items. Some will even order new stock for you!
- Customer Relationship Manager (CRM): If you want to manage relationships with your clients, it’s essential to have a software system that can build customer profiles and track their spending habits. You can then offer exclusive promotions and cater your customer service to meet an individual client’s needs.
- Staff Management: While point-of-sale systems traditionally manage your sales to customers, they can also manage your staff hours and scheduling. You’ll find that many modern-day software applications offer staff management, but it may come at an additional cost, especially if it’s from a 3rd party company.
- Loyalty Programs: While this is similar to a CRM system, loyalty programs can help you reward individuals for spending in your establishment. If you want to offer incentives to loyal customers, your software application will need to track spending and issue rewards.
- Gift Card Management: If you want to offer gift cards to customers, it’s essential to work with a software program that contains this feature. The program will need to issue gift cards, serial numbers, and keep track of balances once the users begin spending money.
- Compatibility with Third-Party Software: Many leading POS companies will also integrate with other software programs. In some cases, you may find a system that allows you to build your custom apps or tools within its platform.
While each software application will have different functions, these are the core features that you’ll find in many point of sale programs. The good news is that most providers today like Harbortouch POS will provide you with an all in one solution (hardware and software), so you get everything you need to start operating quickly.
Common Hardware Components You’ll Need
As you’re well aware, a POS system is much more than just a software program — it also includes functional hardware and equipment. Without a hardware system, there would be no way to access your POS software. Most people think of the core ‘terminal’ when they think of POS hardware, but there are also many more items that can improve the functionality of your system.
Below, let’s take a closer look at the core hardware elements found in modern-day point of sale hardware:
- Terminal/Monitor: This is the main component of your POS machine. In most cases, it will be a touchscreen monitor or tablet. The touchscreen is the part of the POS system that you use to control transactions, orders, and every other function of the system. The hardware device may be an all-in-one computer system, or it could be something much smaller (like an iPhone or iPad).
- Kiosk/Stand: If you have a tablet or other touchscreen device as your POS monitor, a kiosk or stand can hold it in place. Kiosks and stands can make your tablet terminal appear much more professional.
- Scanner: Scanners are handy for retail stores that have tags or barcodes on their items. You won’t need to look up items manually; you can scan the barcode and directly pull up its price and information. You can also use the scanner to import products into the system.
- Card Reader: If you want to process credit card transactions, you’ll need a card reader. Most modern-day card readers allow chip-and-pin (EMV) and swipe transactions. It’s best to find a system that supports EMV payments; it adds an extra layer of security. Some merchant providers will even offer cash discounting to help offset the credit card fees.
- Printer: If you want to print receipts or reports, it’s best to have a printer that is directly connected to your POS system. It would be best if you always double-checked that it’s compatible with your core software.
- Cash Drawer: For those who continue to accept cash payments, a cash drawer is necessary. The cash box may be included in the kiosk or stand component of your POS hardware.
- Other Items: There are a variety of other items you can also consider when you’re upgrading your POS system — such as self-order machines, signature pads, and more.
Not all POS solutions require the above hardware components. If you’re running a ‘credit card only’ business, you won’t need much more than a terminal and card reader. The equipment you need will depend on your specific niche.
What to Look for When Buying a POS System
If you’re searching for a new point of sale solution, it can be hard to determine which options are best suited to your business. Fortunately, there are tons of top-performing POS software products available at affordable price points. If you want to choose the best option for your company, consider the following features during the decision-making process:
1. Industry-Specific Features
The most critical detail to consider is the industry-specific features packed into your new POS software. There’s no point buying a point of sale platform if it doesn’t offer niche tools for your industry. For example, if you buy a restaurant POS platform for a retail business, you won’t have the same inventory management or product importing options.
With so many POS providers entering the market, you’ll always be able to find a tailor-made system for your industry. If you speak to a representative of the POS company you’re considering, make sure to ask about features relevant to your business’s niche.
2. Backend Capabilities
While POS software has traditionally been focused on ‘front-end’ capabilities, such as processing transactions and printing receipts, backend features are now just as important. You can use the software from your POS to manage various components of your business — it’s become one of the best tools you can find for keeping tabs on your business’s performance.
It would be best if you always aimed to work with a provider that offers extensive data reporting features. It should be easy to view your sales, inventory, staff hours, and other vital metrics. You should also ensure that the data reporting portal is accessible from a remote location; you should never have to venture into your physical store or restaurant to view your business’s core information.
3. Payment Processor Flexibility
When you sign up for a new software subscription, you’ll need to find a payment processor with contactless payments and online ordering for your merchant services to help you process credit card transactions. Some providers use in-house payment processors, so be sure to keep that in mind during your research. However, there are many benefits to using the processor that comes with your system, like having one support number to call when you have issues.
Still, if you like the look of a particular software application, but it doesn’t allow you to integrate with external payment processors, it doesn’t mean it’s a bad deal. Just make sure to compare the processing rates against some other payment processing companies. You can even try your luck and see if the POS company is willing to match the payment processing rate of another provider.
4. Hardware Flexibility
As discussed earlier in this article, your POS system’s hardware is one of its most critical components. If you want to use your equipment, it’s best to choose a provider that offers hardware flexibility. You’ll find that many of the leading point-of-sale providers allow you to use PCs, iPads, Android devices, and a range of other hardware options.
You should also ensure that the solution you choose allows you to integrate with various printers, scanners, cash drawers, and other external equipment pieces.
In some cases, being locked into a POS provider’s hardware system can be a significant hassle. If you don’t like the hardware or it consistently experiences problems, it may impact your ability to use your software.
But while hardware flexibility is excellent, it’s not the be-all and end-all. Some of the best POS providers in the industry offer robust in-house hardware solutions to their users. Just make sure that you request a software demo before you decide if it’s right for you.
5. Third-Party Integrations
Today’s POS systems typically allow for integration with third-party software programs; this is one of the easiest ways to access additional features within your configuration. For example, you may be able to integrate with an email marketing service or an eCommerce platform.
Many users choose to integrate their systems with external accounting products. Accounting platforms like Xero and QuickBooks can help you automate all your data reporting and accounting processes. If you do decide to work with a platform that doesn’t provide third-party integrations, make sure the company offers extensive in-house tools.
6. Price and Pricing Transparency
It’s always essential to consider how much POS systems cost. If you choose a provider that’s too expensive for your small business, it may have a severe impact on your ability to profit. It’s best to work with a company or local dealer that offers transparent and affordable pricing — you shouldn’t have to jump through hoops to find out how much everything costs.
It’s also important to consider the price of the system’s hardware. If you must purchase your own equipment, you need to factor this into the setup’s total cost. For those who can’t afford the substantial upfront costs associated with purchasing hardware, providers like Harbortouch include free POS software and hardware with your subscription.
7. 24/7 Customer Support
While 24/7 customer support isn’t a necessity, it’s certainly a nice bonus. If you have a hospitality business with extended opening hours, having an around-the-clock support team can help you avoid costly downtime. Computer software and hardware can get technical at times, and issues will pop up at the worst time, so it’s crucial to have a strong support team by your side if something goes wrong.
8. Positive Feedback from Current Clients
Lastly, you need to check if a company has a solid reputation with current clients. All point of sale companies have some negative feedback from past users, but you should check that you’re not about to partner with a company that is known for ripping off their clients. Head to Consumer Affairs, the Better Business Bureau, or other review websites to read through past reviews and complaints.
Frequently Asked Questions
If you’re new to POS systems, you may have questions about this unique form of technology. We receive tons of questions about POS systems and their core components. Let’s take a look at some of the top questions we receive:
What is a POS?
POS can be an abbreviation for many things, but in the business world, POS refers to the “Point of Sale.” Typically, it’s the place where a retail sales transaction occurs with an exchange of goods or services for a payment. A POS system is the combination of software and hardware used to complete the transaction. POS can also refer to Proof of Stake, a common cryptocurrency term.
What is POS Software?
POS software is any software program that allows you to process transactions. In the world of modern POS technology, the software is the brain and interface of your point of sale system.
While your POS software may run on an iPad, computer, or another hardware device, the software itself is what provides the features, functions, and capabilities.
What is a Point of Sale System Used For?
POS systems are most commonly used to process transactions, manage orders, and produce receipts. In recent years, added capabilities have also meant that POS software is now used to integrate with accounting software, manage employee accounts, track customer spending, and issue gift cards, as a few examples.
With so many features now available in POS apps, you can use your point of sale system as a full small business management tool. It’s an excellent way to keep tabs on staff, track sales, view revenue figures, and grow your business.
Where Can I Buy a POS System?
It’s never been easier to purchase a POS system for your small business. In most cases, you can head online and sign up for new service in a matter of minutes – most industry-standard software is available via monthly or yearly subscriptions.
Different software programs have different hardware requirements, so make sure that you have a suitable hardware device before you sign up for software only. Fortunately, many of the latest POS applications come with free trials or demos. It’s recommended to get a complete package with software and hardware, so everything works nicely together.
How Does POS Systems Work?
Point of sale software is downloaded on a hardware device. The device can come in the form of a computer, iPad, smartphone, Android tablet, or any other standard hardware option. In many cases, the POS application is only compatible with a select range of hardware devices.
Once downloaded and installed, the software acts as the interface for your point of sale system. It is the program that you’re interacting with when you process payments, submit orders or perform any other POS-related tasks.
Which is the Best POS Software?
The best POS software depends on the features that you’re looking for that matches your business requirements. In recent years, several excellent technology companies have entered the market to develop high-level POS software. With so many options to choose from, it’s best to search for POS software that has features specific to your industry or business type.
Our website hosts in-depth information on the best POS systems in the industry. Make sure to check out our reviews, content, and other resources before purchasing a new POS system.
Point of sale (POS) systems are computerized networks used by retailers to process customer sales transactions. A POS system typically includes hardware, such as a cash register or electronic point of sale terminal, and software that tracks inventory levels, customer data and sales information.
Today’s POS systems do much more than simply process transactions. Many modern POS systems come equipped with features that can help businesses streamline their operations, such as built-in CRM tools and inventory management capabilities.
POS systems can be an important asset for any business, but they are particularly well-suited for retail and restaurants organizations. A good POS system can help keep track of inventory levels, better understand customer buying habits and make more informed decisions about pricing and merchandising.
There are a number of different POS system providers on the market, so it’s important to do your research to find the one that best meets the needs of your business.