If you’ve never used a POS system, the thought of using one for your business might seem a little overwhelming.
After all, how exactly does a POS system work? How do you know which is the right one for your business? Will it cost more than a cash register and can you afford it? And is that potential extra cost really worth it? Or, maybe you’re thinking about upgrading your current system but the thought of transferring over your data and learning a new system have you more freaked out than an IKEA instruction booklet.
Don’t worry, we completely understand your apprehension and yes, it’s totally justified. The fear of the unknown can make people a little anxious. It’s also a little insulting to tell you not to worry, when in fact, you’ll do it regardless. So take a deep breath (don’t forget to exhale), have a little faith and read on — the experts are here to put your mind at ease.
How to Operate a POS System
So, how does a POS system really work? The honest answer is that there is no answer. Or at least no definitive answer. Regardless of how the system is designed and meant to be used, every merchant will fundamentally use it in their own unique way based on their specific business needs. Why? Because no one system will work exactly the way it would if you had designed it.
The key is to do your research and choose the POS system most suited for your needs and to know what your deal breakers are — features you absolutely cannot live without. Regardless of the POS you choose, there are some basic operational components that will be available in all reliable point of sale systems.
First and foremost, in learning how a POS system works, is becoming familiar with the setup process. This will consist of both the physical hardware components as well as the software and system data. Once the account has been set up through your POS provider, you (or the provider, depending on the nature of the agreement) can get started with adding inventory, employees, customers, or anything else that needs to be customized to your business.
The hardware side of the equation will vary depending on your specific business type. For example, in a retail business using a cloud-based solution like ShopKeep, your POS terminal will be in the form of an iPad cash register that will run the software to process sales. In the most common setup, it will connect to a cash drawer, a receipt printer, and a barcode scanner — collectively these are known as peripherals. All of these peripherals will need to be configured in order to ‘talk’ to the software. This can be done in a variety of ways depending on which exact peripherals you are using. For example, pairing a Bluetooth barcode scanner to ShopKeep’s iPad cash register would be similar to pairing a Bluetooth headset to your cell phone. The data communication avenue (Bluetooth) is the same, therefore, the setup approach will be the same.
Sales and Returns
Just like standard electronic cash registers, you will need to be able to perform the basic business functions of sales and returns with your new point of sale system.
If working in retail, ringing up an item with a barcode scanner is simple. You simply scan the UPC of the product and the product information — such as name, price, and tax — will populate in the POS. If you don’t have a barcode scanner (although we strongly suggest it if your business type falls under retail), with ShopKeep, you can always manually add an item to a transaction by tapping on the corresponding button or search for it by name. Once all the items are added to the order, you will then select the payment method and close out the sale.
All POS systems will process returns a little differently, so it is just a matter of getting to know how yours works (the flow) and the steps required. With ShopKeep, returns are quick, easy, and flexible, with a similar workflow to making a sale.
Reporting and BackOffice
As a business owner, you will spend a lot of time reviewing sales reports, managing inventory, managing employees, and managing customers. Not to mention a myriad of other aspects for your business in the back office of your point of sale system.
Your back office is an inside look at your POS system’s software capabilities — which you will learn more about in the next section. A big part of your back office is reporting. You need to track inventory, know what you’re selling, who’s buying it and at what price — just to name a few.
How Does Point of Sale Software Work?
Your point of sale software is the application that you will be using to run the key daily operations of your business. Your employees, your customers, and you will spend a lot of time engaging with it so make sure you are choosing the right POS software for your business.
The software is really the first step in determining the ‘how’ in “how does a POS system work?” It’s what holds all the functionality, capabilities, and features together so that the system can function as a whole. This includes the software, hardware, and the back office.
Let’s take a look at a basic retail transaction in ShopKeep as an example. Here’s what you see on the surface. A customer steps up to the register to check out. If ringing up items, the employee will scan items with a barcode scanner. Once the items are scanned, they will be added to this specific transaction. When all of the items are added to the transaction, the employee will select the payment type, complete the sale, and print or email the customer a receipt.
Behind the scenes in the software, however, is where all the action happens. All of those items that were part of the sale will be deducted from inventory and included in reports such as sales by item, sales by department, and sales by tender. If there is a customer tied to the order or any discounts or modifiers, those will also be reported, accordingly. Lastly, the sales data will be included in the X and Z reports, the shift summary, transaction report, and your analytics dashboard.
As you can see, one simple sale has an impact on all of these data points in a POS system, but that’s kind of the whole point, right? If there wasn’t a need for this data, merchants would probably still be using archaic cash registers. Data is key to providing insight into business performance and with the development of POS systems like ShopKeep, data isn’t just for the big guys anymore. It’s for merchants like you.
How Does POS Hardware Work?
As we said, software is the first part in determining the ‘how’ in the “how does a POS system work?” Naturally, the hardware is the second part of this equation. And if the software is the brains, then the hardware is the brawn of the operation. It’s meant to be strong and to support the software.
While nearly every merchant will use a cash drawer, the use of peripherals will vary from one business to the next based on operational needs. For example, a deli will most likely need to use a scale because they sell weighted products. A convenience store, although similar in nature, may not need a scale because they do not sell weighted goods.
The type of connection or communication method between the peripherals and the register will also vary depending on the nature of the business and your preferred setup. If you are a mobile business such as a food truck using ShopKeep with ShopKeep Payments, you would typically connect to the internet via a mobile hotspot. You will then connect your iPad to the hotspot’s WiFi network, then connect a receipt printer and an Ingenico iCMP credit card reader to the iPad via Bluetooth.
If you are a brick-and-mortar retail store, your connectivity approach may vary. You will still have the iPad cash register, but you may also add a Bluetooth scanner to easily scan a product’s UPC at checkout which will allow for a faster and smoother process. As for the printer and a credit card reader, rather than going the Bluetooth route, you’d have the option for an Ethernet or WiFi connection for those peripherals.
What About Integrations and Add-Ons?
When learning how to use your retail POS software, it’s also important to understand how it integrates and works alongside the other software you use to run your business. In fact, one of the biggest benefits of mobile POS (mPOS) systems and cloud-based software in general, is the interoperability with other programs.
For example, there’s a good chance that you use (or will use in the future) apps for email marketing, customer loyalty programs, accounting, and more. If your POS system connects to these tools, it allows you to run a smarter and more efficient business. Here’s what we mean:
- Email addresses collected with your POS are automatically sent to your email marketing platform, saving you from having to do this manually.
- The day’s sales data is automatically sent to your accounting software, saving you time while also ensuring more accurate accounting.
- When one of your regulars comes in and buys something, their customer record in your loyalty program is automatically updated, saving you from tracking this by hand.
- When you sell something through your ecommerce store, your real-time inventory tracking automatically updates your stock levels, preventing out of stock issues and giving your customers a top-tier omnichannel experience.
Now that you have an understanding of what an integration is and how it can affect your business, let’s look at how you actually set them up. Good news for you, it’s usually pretty easy. Most of the time it’s as simple as heading to the integrations section of your POS software and clicking on the one you want to enable. From there, you typically need to enter your login credentials for the service you want to integrate, and that’s it.
Depending on how sophisticated the tools you’re integrating, there may be some additional configuration steps, but usually, with modern POS software
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