What Is a POS System, and Why Do You Need It? 

Setting your business up for success needs more than a good business idea. It requires management and administrative skills, attention, and indeed much work to keep track of sales, marketing, deliveries, and more. A point of sale (POS) system is one of the most essential tools in managing retail stores, travel agencies, restaurants, and even small businesses like bakeries. It’s a set of hardware and software that can help to streamline the checkout process, and ultimately, keep customers happy. Think of it as a modernized cash register.  A POS system is designed to handle everything from customer orders to inventory management, reporting, and tracking. There are two main types: hosted and on-premise.

What Is POS, Its Goals, and Why Do Businesses Use It? 

POS is the place where customers can pay for products or services at your store. Every time a customer purchases, they’re doing a point-of-sale (POS) transaction. These systems are used to process credit card and debit card payments, as well as cash and checks. However, a POS system is more than just credit card terminals. With today’s technology and new payment methods such as mobile payments and contactless payment options, a POS can help you manage inventory, payroll, marketing, and more. One of the most significant advantages of using a POS system is that it consolidates all the data related to your business into one central location. You can quickly access sales and inventory levels reports to make informed business decisions.    Today’s POS systems are used in almost every type of brick-and-mortar store. In many cases, they’re an essential part of the shopping experience for customers. They allow you to accept payments from your customers quickly and easily and then process them through sales reports and accounting software.

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Trying to complete transactions without a POS system is like running a retail business without a cash register. It’s just not going to happen!

The Technical Equipment and Components of a POS System

As we have mentioned before, a point-of-sale system (POS system) is software that allows merchants to automate operations, including sales, inventory management, and accounting via computer. Modern POS systems consist of hardware and software components as well. 

Hardware components

The point of sale terminal (also called a “cash register”) is the physical piece of equipment that you use to run every aspect of your business. These are some of its components: 

  • Printing device(s). A printer is a must for any POS system. You’ll want a printer that’s fast and reliable so your customers won’t have to wait too long for their receipts or other printed materials.
  • Touchscreen display. A touchscreen display makes it easy for your employees to run transactions, and access customer information like addresses, contact information, and product catalogs.
  • Cash drawer. After customers pay for their goods, your cashier will need somewhere to put the money, whether it’s in a cash register or a safe. A cash drawer is needed to store change, checks, and other forms of payment that aren’t made via credit card or debit card.
  • Microphone/speaker. These components allow you to accept credit card payments over the phone using an automated attendant feature.
  • Card reader/printer. Some businesses choose to accept credit card payments using an external card terminal instead of swiping cards directly through their terminal or computer, which can be more secure.

Software components 

POS software is the backbone of a point-of-sale system. It’s designed to record transactions in real-time, process payments, and produce reports. Let’s see some of its features: 

  • Employee management. POS systems assist with employee management and payroll distribution. Each employee is allocated a profile on the system to set tasks and keep track of their working hours. 
  • Inventory monitoring. Precise monitoring of the stock and product sales is crucial for the selling process to flow seamlessly and without stops. You’ll know what’s selling the most and what to order less. 
  • Employee training. Many POS systems offer employees training in order to provide customers with a satisfying checkout experience and use the system efficiently.
  • Third-party integrations. Advanced POS software integrates with other apps such as email reminders, accounting apps, table viewers, digital menus, and other software that displays and keeps track of sales processes for different industries. 
  • Analytics. Stock and sales insights are essential to understanding customers’ buying needs. An intelligent POS software must provide detailed reports of inventory and sales to assist you in making wiser decisions. 
  • Payment processing. An important part of POS software is displaying and accepting multiple payment methods. It includes recognizing what the credit card reader and cash register accept and more. 

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  • EDI integration. EDI (Electronic Data Interchange) allows the transmission of sales receipts, documents, and papers electronically. POS software is capable of functioning with EDI; it helps to portray transactions and sales data simply. 
  • Customer loyalty programs. POS software gives businesses the option to reward regular customers with discounts and special coupons. Instead of tracking their purchases manually, the system intelligently records customers’ buys.

What Type of Data Is Collected by POS Systems?

POS data is the heart of your business. It’s the information you need to run your operation and make decisions that help you grow, which is why it’s important to understand what each piece of data means and how it can affect your business.

Inventory data

The inventory data provide a snapshot of what you have on hand in all departments, including real-time vendor pricing, inventory amounts, and location-specific inventory levels. You can also access information about past inventory, such as how much was sold, who purchased it, and more.

Product data

Product data is stored in the system and consists of details about each product sold at the register. It includes the product’s name, description, price, UPC, size, quantity sold, and more. This information gives retailers insight into which products are selling well and which ones aren’t.

Sales data

Sales data contains information about every transaction that has ever taken place in your store, from the most recent sale to the oldest sale in history. This valuable information can be broken down into several categories: sales by date, product, employee (including time clock history), customer purchase history, and more. 

Customer data

You will create a Customer Master File (CMF) when you first install the system. The CMF is a database that holds all of your customers’ information: name, address, phone number, and email address. When a customer makes a purchase or returns a product, their information will be instantly available in the POS system.

How Is Data Categorized? 

Reports provided by these POS systems bring together data useful for large organizations and small businesses, and it can be separated and analyzed in different scopes. Especially for companies with multiple locations, this data might be added into the long-term business strategy.  

  • Store level. POS systems installed in single stores gather statistical data after each transaction. It includes individual checkouts, QR barcode scanners, and handheld hardware which reflects each purchase and helps figure out store stock needs. Data gives insights on the average items per order and daily net sales on this scale.  
  • Regional level. Consider the data gathered from several locations within a particular region. Such data unifies transactions happening in multiple shopping malls, retail stores and gives business managers a clear picture of the products that sell better in certain regions and changes that need to be considered. 
  • Corporation level. At a corporate level, POS data assists in orchestrating marketing strategies for multiple locations. Since these systems track the SKUs of all products, it’s easy to allocate most products to the location where most sales are expected. Knowing the places with higher footfall, a corporation can coordinate the staff properly. 

Is the Product Hot or Not?

Predicting the upcoming best sellers and preventing stockouts is one of the reasons why businesses need POS data. Relying on data from previous days, weeks, months, or even years, business owners can identify hot products and prepare for sale seasons and holidays.  Features that determine a product’s demand and can be extracted from POS data include: 

  • Sold Quantity. The number of products sold over some time is a direct indicator of customer preferences.  =
  • Inventory. Tracking products by their SKUs, the system compares the sold quantity and the remaining stock. 
  • Location. Sales data from different locations brought together helps in distributing hot items and understanding which items sell best in each area. 

How to Use POS for Seasonal and Non-seasonal Producing Plans

Seasonal and non-seasonal businesses can benefit from the point of sale systems capable of tracking two or more sets of data, including inventory levels, sales transactions, and product costs. This would allow one design to be used for seasonal business while the other could be used for a non-seasonal business.

Seasonal items

The best point-of-sale system for seasonal businesses is one that is flexible enough to accommodate peak times and slower periods yet doesn’t add too much expense throughout the year. A scalable system lets you add modules as your business grows and adds more locations. 

Non-seasonal items

For non-seasonal businesses, look for a system that can handle consistent, stable growth without requiring too much extra equipment or shifting needs over time. These businesses tend to see fewer fluctuations, but still require a point of sale solution that meets their busy schedules and changing needs over time.


In the end, next-generation POS systems are more exciting and impactful; they help you gain better customer experiences and make your business processes smoother. They are also versatile, which means you can use them to transact and handle business-run related tasks. The new-age POS systems’ low cost of digitization and benefits are so lucrative that no business can afford to ignore them. The adoption rate will continue to grow to help enterprises tap into and remain customer-centric. All this while transforming workflows, delivering a superior shopping experience, and cutting down on technological dependency.