How to Use a POS System to Run Your Business

From the grocery stores to your favorite café, nearly every mom-and-pop, brick and mortar, and mobile business uses a point-of-sale (POS) system to manage transactions. POS hardware includes touchscreens, cash drawers, bar code scanners, and other tools powered by software that manages sales and payments, inventory, and customer service. A well-instituted POS system can perform a lot of sales and management chores, saving you time and money.

How you set up and run a POS system will vary by which software and devices you choose. We cover the basics of how to operate a POS system. If you’re new to POS software, be sure to look at the help features of your specific program.

Setting Up a POS System

Once you’ve chosen your POS system, the exciting but painstaking work of setting it up begins. It pays to take time with your POS setup, not only because an error can affect other functions, but also because the better you set up the system, the easier it is to use and expand upon in the future.

You’ll most likely establish settings and input data on the backend with a desktop or tablet, which means you can connect the hardware while working on the software.

Watching videos or demos provided by your POS vendor will help you learn to operate your specific POS system. Bookmark them so they’re easier to return to, and make friends with the Help button that’s usually found in the upper right-hand corner of any program.

Most POS systems have settings to adjust payments types, taxes, tipping, receipts, and more.

Adjust Sales Settings

Once you’ve entered your account and store information, you’ll probably want to start with adjusting basic settings. These usually include taxes, tips, and payment types.

• When allowing a payment type (such as Apple Pay or PayPal), be sure your hardware and payment processor support it.
• Some programs let you have multiple sales tax conditions (such as for different locations).
• You can activate functions for collecting customer information, and customize what gets printed on receipts.
• If you have loyalty programs, military discounts, or other special payment groups, add them as well.

Input Vendor Information

If your POS software has a section for tracking vendors, you should enter this information next. This will ensure it’s already in the system when you start inputting inventory. You’ll be able to sort products by the vendor, which will be extremely helpful when creating purchase orders or low-stock reports.

Add Inventory

Begin by taking note of the options provided by your POS software. This can make it easier to organize your product information. Most POS systems include space for an item name, bar code, SKU, modifiers like color, size, and style, in addition to photos. They often allow you to note a vendor for easier reordering.

Here are some tips you should keep in mind when adding inventory to your POS system:

• Make use of the category, subcategory, and keywords sections. Even if your stock has bar codes, you want your employees to be able to easily find an item via search in case the scan fails or a tag is lost.
• If you already have this information in a spreadsheet or have it in a different POS program, you may be able to bulk upload and convert it. Afterward, however, go back to fix any errors and fill in blanks.
• Many retail and restaurant POS systems have professional installation available for faster inventory setup—they’ll also walk you through the features and reports to get the most out of each tool.

Configure Employee Settings

Some POS systems have payroll and scheduling functions including tools for employees to clock in and out of shifts or at least integrate with third-party payroll and scheduling programs. In addition to inputting employee information (including pay, overtime, and tips), set any permission controls for using the software, such as void or refund restrictions and access to financial reports.

Connect Third-party Applications

Check to see if your third-party apps like accounting or inventory software integrate with your POS and whether those integrations are one-way or two-way. For example, you may need to push reports from your POS into your accounting software. Some systems have two-way integrations, so you can make a change in either system, and it will be reflected in the other.

Setting up your software can be a daunting task, especially if you have large inventory or multiple store locations. Some companies will set up your hardware, menu settings, and inventory data for you at an additional cost, but if you choose this option, double-check everything.

Once you have the system loaded with the settings and data, you can start using it to its fullest abilities. Here are some of the best functions of POS Software. Not all software systems have these natively. Some offer them as add-ons (or not at all). Check with your POS vendor.

Using a POS System to Ring Up Sales

POS systems make it easy to keep track of item prices, sales, and rules.

1. Connect The Sale to a Customer Account

After adding items to the sale, make sure the transaction is associated with a specific customer. If the shopper is a repeat buyer, look up their name in the search bar or under a “Customer” tab. If it’s a new shopper, add basic details like name and contact information.

The system can prompt your cashier or sales clerk for additional information, like military status (for discounts), or invite a customer to join a loyalty program. It can also record special notes like feedback or special requests. If you have lay-by/layaway programs or deferred payment plans, most retail POS systems can handle those as well.

Collecting customer data is more realistic for boutiques and specialty shops that offer customized product recommendations and services, rather than high-volume businesses like convenience stores.

However, any business can benefit from this practice, because it will make it easier to manage individual transactions, for example, if you need to see a customer’s purchase history or find a sale without the receipt. Collecting this data also allows you to build out targeted marketing campaigns.

Email and SMS receipts are a convenient option for customers, and provide an opportunity for shoppers to opt-into marketing content.

2. Apply Discounts

Once you’ve added each item and the customer profile to the transaction, the last step before processing a payment is adding relevant discounts. Most POS systems have features to pre-program discount percentages that can be applied to individual items or the total transaction. In most cases, systems also have tools to manually discount or adjust the price of items, though often this is restricted to Manager or Admin-level logins.

3. Accept Payments

Now that it’s time to actually process the transaction, your POS will likely prompt you to choose from a variety of payment options:

• Cash: Nearly every POS has an option to type in cash payment and will automatically calculate the required change.
• Check: POS systems also have tools to type in check amounts and accept the payment.
• Credit or debit card: Most POS systems have either built-in card payment processing or settings to integrate a third-party payment processor or merchant account to accept card payments through the POS (instead of having to ring up in the POS, then enter the amount in a separate payment terminal).
• Contactless payment: Most chip card readers also have features to accept contactless payments including Apple Pay.
• Layaway: POS systems built specifically for retailers, boutiques, and specialty stores, like Vend, sometimes have built-in layaway tools so customers can put down a deposit to reserve an item or pay for their purchase over time.
• Gift card: Depending on your system, you’ll be able to scan, swipe, or type in gift card numbers to redeem.
• Loyalty program: Associating a customer account with each transaction is important for tracking and redeeming loyalty rewards and points. For POS systems with built-in loyalty programs, like Square and Lightspeed, customers can redeem points toward purchases at checkout.
• Buy now, pay later: These payments options allow customers to pay for their purchase in installments, while retailers receive the full amount upfront.

Offering Curbside Pickup and Online Ordering

POS systems often let you set up online stores or work with ecommerce software so that you can run your online and in-person sales through one system. For more information on how to accept click and collect orders (also known as curbside pickup), and setting up an online store, download our e-book for a comprehensive step-by-step guide.

Managing Inventory With a POS System

Another strength of POS systems is how easy it makes tracking inventory. You can program the software to track the number of items available and locations (if you have multiple stores) as well as set low-inventory alerts. If you carry perishable items, you may be able to include expiration dates.

Most POS software includes options for inventory adjustment, such as seen on this Square screen.

The POS system will track inventory as items are sold. There’s also an option for conducting a manual inventory count and making adjustments as needed. Using a bar code scanner can make inventory management and manual counts easier.

Some POS software include reordering capabilities. You’ll need to have stored the vendor information, but once you do, you can either have the program automatically order more supplies or flag you to order supplies when your stock falls below a set number.

Using a POS System for Customer Relationship Management

The best way to increase sales and encourage a loyal following is by knowing your customers. A Customer Relationship Management (CRM)-enabled POS system makes that easier.

Not only can you use the POS system to collect customer information, but you can track information about your buyers, like preferences and spending history. The information lives in the system, where you can use it for campaigns or to send targeted emails, or your sales clerks can view it to make recommendations to a customer while they are in the shop.

One way to enhance customer relations is with a thank-you email and coupon.

How to Manage Customer Orders Using a POS System

POS systems do more than collect payments at the time of a transaction, of course. You can use them to take orders for products, services, or meals. Here’s where categories and subcategories, modifications, and comments are especially important. These tools make it easier for your salesperson or cashier to record the order correctly and note any changes.

The POS system will process the order and can track if it’s been delivered, picked up, paid for, or even canceled.

For online orders, having an abandoned cart notification can help you recover those sales. More than 69% of shopping carts are abandoned. Studies show that about 10% of customers who receive an abandoned cart notice in an email will go back and make the purchase.

Managing Employees With a POS System

Most POS systems have employee management functions or will offer them as add-ons or through integrations with third-party apps. You can use them for tracking time and schedules, sales for commissions, and tip eligibility. In addition, you may be able to note capabilities and certifications. This comes in handy when you need someone last-minute to fill a shift.

POS software services offer a wide range of employee tracking options.

How to Use POS Reporting Tools

POS systems can generate useful reports, including sales over a given period, sales by item, sell-throughs, and return-on-investments. Each software has its own standard reports and customization features, so take some time to explore its offerings.

Most POS systems also let you download the raw data in Excel or CSV format for further number-crunching or use in other programs like inventory management or accounting software. These reports can help you better understand your business, including what items sell, who your best salespeople are, what special events or sales produce the best results, and where your weaknesses lie.

Some POS software, like Lightspeed, lets you create customized reports.

For a full breakdown on how to interpret POS reports and use the data they provide to improve sales and your business’ bottom line, read our guide on retail data analytics.

Bottom Line

What you get out of POS software depends on what you put into it. Taking time to really learn your software’s capabilities, inputting all the relevant data, integrating with third-party apps, and training your people to use it well will result in you getting the most for your investment. Most POS software companies offer videos, how-to articles, and training. Take advantage of these tools. A well-run POS system can save you time and effort managing customer relationships, inventory, and payments, which all saves you money.