The Ins and Outs of Point of Sale Systems
Point of sale (POS) systems is an all-in-one solution that allows you to charge your customers for goods or services, accept payments and create a receipt or invoice with an intuitive combination of hardware, software and customer support resources. POS systems also adjust your inventory to account for the purchases automatically. Outfitting your small business with a point of sale system increases your flexibility, your reach, the level of convenience you offer your customers and as a result, your overall profit.
Do I Need a POS System?
If you sell goods and services, you can likely benefit from a point of sale system even as a very small business. Even the best spreadsheet for tracking sales and inventory requires substantial upkeep and maintenance to provide a true picture of your business operations. With a POS system, you can complete the same complex tasks, such as running reports, at the push of a button. Collecting data via this type of system allows you to make informed business decisions. In addition, this investment may improve your image among potential customers and funders since it shows you are serious about your company. Although you might start out going old school with a traditional cash register, it will be difficult to keep up with the pace of modern business. It also requires a separate machine if you plan to take credit cards.
Functions of a POS System
A POS system offers substantial business benefits beyond a simple check-out. This software lets you analyze your sales data and adjust your inventory accordingly, develop a sales history to streamline your seasonal ordering process and integrate barcode scanners and credit card authorization functionality. The best type of POS system for the needs of your specific business requires careful consideration of these factors:
- Software interface: Choose a system with an intuitive, user-friendly design that makes it easy to access functions and features.
- Sales information entry: Do you prefer to type in an item number manually, or use a barcode scanner to automatically call up the item? Many POS systems allow you to do both.
- Pricing options: If you often run promotions, you can find a system that allows you to automatically account for a percentage discount on specific items.
- Inventory tracking: Some systems automatically update your accounts receivable and inventory records with every customer transaction. You may want to choose software that provides an alert when you’re running low on a specific item, making it easy to reorder on time.
- Sales tracking: Depending on your business, you may need a system that can automatically invoice customers for payments over time or one that handles both sales and rentals.
- Security features: Look for a system that can provide automatic audits in case of a discrepancy.
- Reporting capabilities: You should ideally be able to easily parse data to see your sales, costs, and profits displayed for each individual inventory item or category of items, by a salesperson or by time period.
- Industry-specific features: Depending on the type of small business you own, you may want to consider a POS system that’s tailored to your specific industry. Examples include systems designed for nail salons, auto repair shops and restaurants.
- Support for multiple locations: If you run a business that needs a POS system at more than one location, look for a vendor that supports multiple locations without charging additional fees.
- Add-on services: Some vendors support additional marketing features integrated with the POS system, such as email sales templates. These are convenient for businesses seeking a comprehensive sales and marketing solution. Integration of employee management systems allows for seamless staff scheduling, timekeeping and payroll.
The POS hardware you select depends on whether you need a mobile option. If you prefer a fixed location for your system, choose a PC or network of PCs to house your POS. If mobile is best, you can select between either an Android tablet or an Apple iPad. Although the iPad has long been the gold standard for tablets, Android is the POS preference of many business owners because of the affordability of the tablets, range of available sizes and features, and durability. These tablets also have more flexibility in terms of peripheral connections.
PC-based POS systems are connected to a server that houses your customer and sales data. Android and Apple tablets both run on cloud-based systems, which update this data in real time.
You can augment your POS hardware with other peripherals based on your needs, including but not limited to cash drawers, display systems, scanners and receipt printers.
Individuals who run a fully mobile business will need a fully mobile POS system. This includes both credit card swiping and chip functionality, a means of printing receipts and the ability to work offline if you’re in an area without wireless internet or a strong data connection.
You can choose either a POS software package that is installed on your PC or a cloud-based model that you can access from any device with an internet connection. Although the latter is a much more convenient solution, cloud software may carry a monthly service fee. For this reason, you might hear the term SaaS–Software as a Service–to describe a cloud-based POS system. Keep in mind that traditional POS software is a less modern solution. Because a POS system is an investment in the technological future of your business, you should consider the industry standard not just right now, but in five years from now.
Another benefit of cloud-based POS is the frequency of software updates. Traditional POS systems are typically updated on an annual basis, and this substantial update may require significant system downtime. With cloud-based systems, you’ll get frequent updates that won’t interfere with the seamless operation of your business, improving your software’s responsiveness and ease of use.
Support and Security
These two S-words form the cornerstone of protecting your business and customer data. Because you’ll be collecting credit card numbers and other sensitive information, you’ll need to make sure that data is inaccessible to those with nefarious purposes. For the highest level of safety, choose a POS system that features end-to-end encryption, which means that all data is encrypted (unreadable) throughout the entire transfer process. PC systems that store data on a local server are more susceptible to hacking. You should also avoid any POS system that runs on Windows XP, as security support is no longer offered for this operating system. This means your software will be at increased risk for fraud and accessible by hackers.
All POS systems should adhere to PCI compliance guidelines. These security standards, known as the Payment Card Industry Data Security Standards, are required for any business that has a merchant ID and collects credit card payments. At a minimum, your online security system must consist of the following 12 elements:
- A firewall that prevents unauthorized access to consumer data
- Secure, unique passwords for all systems; using the vendor’s default password is prohibited\
- Protection of consumer credit card data stored within the system
- Encrypted transmission of consumer credit card data
- Use of regularly updated antivirus software
- Restriction of employee access to consumer credit card data on a need-to-know basis
- Unique IDs for all staff members that use the system
- Restricted physical access to credit card data
- Monitoring of all online data access
- Regular testing of security processes and procedures
- Maintenance and employee awareness of a written security policy.
For best results, choose a POS system that includes built-in PCI compliance to avoid hefty fines and likely compromise of your customer’s sensitive information.
Customer support is also an essential element of any POS system. Because the system will be so integral to your daily operations, you’ll want to ensure that you can receive technical assistance whenever you need it. The most reliable vendors will offer 24/7 emergency support, which means you’ll always be able to access your data.
Due to the cost of a POS system can range from just a few thousand to tens of thousand dollars a year, it’s important to choose a solution that fits your budget. With traditional systems, you’ll be charged an upfront licensing fee when the server and software are installed, as well as a monthly fee to maintain the software and provide support. For some companies, these costs add up to $50,000 or more a year. With a cloud-based system, you’ll incur the initial hardware costs and a monthly usage fee. The most expensive cloud-based systems can cost up to $10,000 per year, but small businesses can often find solutions that are much more affordable.
When calculating the potential cost of a POS system, remember to account for not only the initial setup charges but also any payment processing fees. These are typically a percent of each sale plus an additional flat fee. Most companies also charge monthly fees for PCI compliance, chargeback protection and other services. Remember that the higher the fees, the lower your profit, so it’s important to choose a vendor with low fees (especially if you already have a thin profit margin). You’ll need to add in the cost of buying and renting the needed equipment, too.
Best POS Systems
Business News Daily has ranked the best POS systems in the mobile, restaurant, retail and all-in-one categories, giving high marks to vendors that offer affordable, intuitive products with time-saving data analysis features and the ability to integrate marketing programs. Reliable, round-the-clock customer support is also essential. Based on these parameters, the magazine’s recommendations are as follows:
Vend, an iPad-based system, is named as the best all-in-one POS for small businesses. Benefits of this affordable system include:
- It is versatile and can easily be scaled to meet your needs.
- It offers a selection of payment processing services.
- It’s compatible with other POS hardware, which makes it an ideal choice if you want to augment a system you already own.
- It’s affordable for small businesses, with transparent pricing at four different service levels, ranging from $69 per month for a basic plan to $249 a month for a plan that supports multiple business locations.
- It comes with 24/7 email and online chat technical support.
- It has an attractive, intuitive interface and packs plenty of features into an easy to use package.
With these great features, it’s no wonder that Vend is currently the most popular point of sale system in the United States.
Bindo was named as the best overall iPad-based system for its combination of innovative features and competitively priced packages. This POS is suitable for most types of small businesses, including both restaurants and retail.
- Monthly subscriptions start at $59 per month.
- Bindo supports multiple payment processors and third-party hardware.
- Added functionality includes the Identity Safeguard user ID system, a full product database and integrated payment processing.
ShopKeep, an iPad-based system that runs on the cloud, was named as the best choice for retail stores, while TouchBistro has earned high marks for restaurants and cafes.
PCMag has also weighed in with its picks for the best POS system. The publication chose the Square chip card reader as its top selection. This flexible system offers automatic email reporting and printer re-routing, cloud-based software, the ability to manage and report for multiple stores, a specialized kitchen display and a comprehensive user ID system with multiple security levels. Square is also notable for its quick-start ability; it’s easy to learn, and you can sign up instantly by downloading the software’s app. Its chip card reader costs just $29 and can connect to your iPhone, making this a winner for mobile businesses.
If you need capital funds to invest in a point of sale system for your fledgling enterprise, you may want to consider the flexible terms and competitive rates of an online small business lender. They offer a simple application process with a much quicker turnaround rate when compared to traditional lenders. Do your research, then get the money for the POS system you’ve selected and allow your business to grow beyond your expectations.