Would you like to cut your checkout time from 1 minute to 10 seconds? Want to have an accurate inventory count without having to spend hours every week physically counting each of your items? Tired of messing with confusing spreadsheets at tax time and looking for a better way to manage your sales and tax reporting? With today’s POS systems, you can do all of these things, and more. Keep reading to find out how!
What is a POS System?
POS stands for Point of Sale software. Basically, a POS system is a cash register on steroids. It is a software that allows your business to accept cash, checks, and most importantly, credit card payments, using either a computer or tablet. It also integrates with other checkout technology, like cash drawers, barcode scanners, receipt printers, etc. to form one complete checkout unit.
But, what really sets a POS system apart from a traditional cash register, is the way in which it can also help with many other areas of small business management. It can help you manage inventory, schedule and track employee hours, capture customer information, sync directly with accounting software, and much more.
Why Switching to a POS System Will Save Your Business Time and Money
In a 2015 study done by InfusionSoft, small business owners identified “time to get things done” as the #1 “huge challenge” facing their business. For the small business owner, time is money. Anything that can save you a significant chunk of time, means a decrease in labor costs and an increase in money and time that can be reinvested to spark business growth. POS systems can do just that, saving you both time and money by streamlining your whole business management system. Here’s how:
1. Automatic Checkout System
A POS system completely transforms the checkout experience. You just select each customer item from your item library on the screen or scan it with a barcode scanner. Once selected or scanned, any applicable discounts, taxes, inventory counts, and totals are displayed, calculated, and updated automatically in 1-2 seconds. Instead of taking minutes to ring out a customer and enter each sale in manually, the whole process can be completed in a matter of seconds with much more accuracy and consistency.
POS systems also make other register tasks much easier. You can refund a customer, remove an item from the sale, redeem gift cards, and print or send a receipt with just one or two clicks or touches on the screen. Of course, with each action, individual sale totals and overall store totals are automatically adjusted to reflect the change. That’s efficiency for you.
2. Processing Credit Cards is a Breeze
With an old cash register, you either could not accept credit cards or you needed to set up a completely separate terminal to do so. With modern POS systems, credit card processing is a breeze. If you are using a tablet based POS system, you generally just plug a card swipe into the headphone jack or Thunderport (mac) and you are good to go. With Desktop based systems, you can generally hook up via a USB port.
To actually process credit card payments, you will need a merchant account. Some POS systems, like Square Register or Paypal Here, have their own merchant account included, meaning you just swipe and go. Others, like Shopkeep, allow you to pick your own merchant account provider, and connect them with your Shopkeep account (can generally get a cheaper rate). To learn more about merchant accounts, check out our Merchant Services Buyer’s Guide. For more information on processing credit cards, visit our guide on How to Accept Credit Cards.
Note: As of October 2015, Merchants will be required to have an EMV compatible credit card reader. To learn more about EMV credit cards and potentially get a free reader, check out this EMV Whitepage by Shopkeep.
3. Having a Quick and Precise Inventory Management System Can Revolutionize How You Do Business
One of the biggest advantages of using a POS system, is its ability to revolutionize the way you manage your inventory. In the old days, to have any kind of accurate inventory count, you had to mark inventory when it came in, perform physical counts of stock every week, and then cross-compare those lists with printed sales reports to get any kind of idea of how much of any one product was sold, spoiled, or stolen (which most small businesses never took the trouble to do).
Today’s POS systems can save you countless hours of labor time and cost while doing a much more accurate job of managing inventory. When you get a shipment in, you just count your inventory as you are stocking it and input the count into your POS system, or you can often even scan it in with a barcode scanner even more efficiently. When an item sells, it is automatically deducted from your inventory list. At any give time, you can access an inventory count on your POS system of any item in your store with just a click or two. There are several key ways this can help your business.
- Reduced Labor Costs
You will still have to do occasional physical inventory counts, just to cross check with your sales data. But, those counts will be much fewer and farther between, meaning a significant decrease in labor costs associated with inventory management.
- Increased Sales
With an inventory system in-place that consistently yields accurate results and that can be easily accessed, you can know within a couple clicks what products are selling and which are not. This means that you can much more accurately tailor your purchase orders, ordering less of underperforming product and more of your best performers. This means more of what customers want on your shelves and increased sales.
- Reduced Retail Shrink
Retail Shrink has become a huge problem, costing US Businesses an estimated $1.3 billion in losses in 2013 alone. Most small businesses do not have a good enough handle on their inventory counts to know what is going missing (if they even realize it is a problem). But, with an accurate inventory system in-place, you will soon learn which products are disappearing and be able to adjust your security and store layout to discourage theft and save your business money. To learn more about preventing retail theft, check out our article, How to Reduce Retail Theft.
4. Managing Employees is Much Less of a Headache
Employee management is a necessary evil that goes hand-in-hand with owning a growing small business. It can be quite the chore. But, POS systems can go along way to decreasing the stress of employee management. Here’s how.
- Makes Payroll Much Easier
Payroll is perhaps one of the biggest headaches related to employees that a small business owner faces. But, with a POS system, you can import employee time clock hours directly from your POS and make your payroll calculation a piece-of-cake.
- They partially manage themselves
Many of today’s POS systems allow employees to do some of the management themselves. For example, using their PIN, an employee can login to the POS system online and request time-off or organize a shift-change. All you have to do, is sign-in every once in awhile and approve requests. More convenience for them and less work for you = a win-win situation for everyone.
- Know which employees are worth keeping, and which are not
Your POS system can tell you a lot about each employee, like how many times they have clocked-in late, what kind of sales record they have, how many times they have requested off, and much more. What this means, is that when you do employee reviews and have to make tough employment decisions, you have the best information possible right at your fingertips to help you make the right decision. Also, it is indisputable evidence you can reference if an employee lies about their work record.
5. Accurate and Centralized Sales’ Reporting and Analytics Means No More Confusing Paper Trails and Spreadsheets
Ever feel like banging your head against a wall because you cannot find that one report or time sheet you need? With a POS system, all the reports and analytics you need are stored digitally and are only a click or two away. You can generate sales reports a variety of ways, by specifying a specific date-range or time period, by specific item, by wider category, and much more. You can generate labor reports, overtime reports, and more as well. If you would need a physical copy for some reason, you can just print it off with a simple click. In other words, when you need an important report, you will know exactly where to get it and not have to spend fruitless minutes or hours searching around in the paper piles while getting more and more stressed.
6. Accounting Integration = A Whole New Tax Season Experience
Every small business owner hates tax time. It seems like it is just endless frustration, paperwork, and recalculation. Some business owner elect to try to do their business taxes themselves. Others, prefer to just pay an accountant. Whatever the case, a POS system will make a big difference for your business come tax season. If you do taxes yourself, you can just import all your revenue and sales information from your POS system directly (or via CSV file) into your tax preparation software, which will save you all kinds of time. If you pay an accountant, you can just send them over that information and make their job a lot easier, which means you will pay less.
I could write pages and pages more on all of the in-depth ways a POS system can save your business time and money. But, the above should give you a taste of the wealth of possibilities that a POS system can provide for your business. In short, if you are still using a traditional cash register, you are really limiting your business.
We have touched on a lot of the different things that a POS system can provide for your business. Let’s take a look at the specific features that actually make those benefits possible.
Here are the features that nearly every POS system, from the most basic to the most advanced, will provide with their entry level plan.
- Accept Cash, Check, and Credit Card Payments
- Track Inventory, Get Text and Email Alerts When Stock Gets Low
- Permission controls for employees (who can open the cash register without a sale, who can close out a shift, etc)
- Integration with Quickbooks and other accounting software providers
- Traditional (with compatible receipt printer), Text, or Email Receipts
- Sales analytics (Sales per day, by category, by salesperson, etc)
- Seamless Refunding
- Create and Redeem Discounts and Coupon Codes
Advanced Features (Check With POS Provider for Availability)
The standard feature list is impressive, but many POS systems have even more management functionality built-in, as we have touched on a bit. Let’s take a look at these advanced POS features that can help you manage your small business.
- Purchase order estimates based on sales history (ie. based on last years sales of holiday candles this is what you should order for this year)
- Purchase order creation (Create and send orders to suppliers)
- In-depth inventory management (transfer inventory from one store to another, online and in-store inventory management, scan item barcode to automatically add to in-store inventory, etc)
- In-depth employee management (time-off requests, benefit management, shift change requests, etc)
- Payroll (calculate payroll, time clock integration, pay employees, manage overtime, automatic payroll tax estimation, etc)
- Automatic Markup and Margin calculation and pricing tools
- And much more . . .
How Much Will it Cost?
Your POS system cost really depends on how sophisticated of a system you want. If you just want something that will do basic payment processing and inventory tracking, you can go with Square Register. The software is free. The only fee is the 2.75% credit card processing fee.
If you want a more sophisticated system that can has more in-depth inventory controls, purchase order estimation, time tracking, etc . . . you will probably starting out at around $69/register/month or so for a system like SHOPKEEP up to around $200/location/month(2 registers and 10 users) for an even more advanced system such as ERPLY.
In short, your POS cost will really depend on how many registers you will need and what kind of feature set you require. To learn more about pricing, check out our POS Buyer’s Guide.
Not Sure Which POS System is Best? Try SHOPKEEP
I have personally tested 15 of the top POS providers to see which is the best for the average small business owner. After a lot of time on the Ipad testing each system out and talking to representatives and salespeople from each company, SHOPKEEP emerged as the clear winner in overall value for the small business owner. There were three main reasons for this:
- SHOPKEEP has many of the features of higher-powered POS systems at a fraction of the cost
- SHOPKEEP is really easy to setup and use
- SHOPKEEP has exceptional customer service and approachability (I have actually interviewed Jason Richelson, their founder and CSO, personally and he was very personable and helpful)
If your business is unique and has specific POS requirements (multi-store, always on-the-go, etc), another POS system may be a better fit. To learn more about SHOPKEEP and other POS systems, check out our Best POS Software Guide, where we recommend different POS solutions based on specific business needs.
To put it simply, POS systems can transform the way you do business. If you are still inputting each sale individually into a traditional cash register, maybe it is time to consider making the switch. Your business, your employees, and your bottom line will thank you.