How Do POS Systems Work?

Obtaining a Point of Sale (POS) system can prove to be a beneficial move for the growth of your business. How exactly does it work?

Point of sale (POS) systems help businesses by reducing the work that you have to do related to paperwork, inventory monitoring and marketing giving you more time to focus on managing your business instead of being held back by the small details. Point of sales systems are available even for small businesses. In fact, some POS services specialize in various industries.

The whole process starts with point of sale installation and setup which usually includes training. Depending on the kind of business you own, you may choose to add extra peripherals to the main server or computer and cash drawer, such as a credit card swiper, point of sale printers, and bar code scanner, among other things. The POS vendor of your choosing will install and setup the entire POS system and teach you and your personnel how to use it.

Data Entry

You will need to enter the information for each customer, both old and new, so it will be easier to track their contact information and purchase history. This will be time consuming at first; however, in the long run, the time you spend entering data regarding your customers and their purchases will be reduced. Once you have a client’s information entered in a POS terminal, you can pull up information for customers by name, telephone number or customer number if and when you need to get and use it.

Inventory Management

As with customer data entry, it will take some time and effort on your part to enter each of your inventories, as well as where they are stored, into the POS system for your future reference. This way, when a bookstore owner wants to know exactly how many of a particular book they still have in stock, for instance, he or she can easily pull up that information using their POS equipment. Additionally, most POS systems will subtract an item from your inventory once you list it on your customer’s invoice. Some advanced POS software can even alert you when you get low on certain inventory items.


Because your POS system contains all your customers’ information including their contact details and purchase history, you can easily create simple marketing plans that will help you grow your business. As a bookstore owner, you may wish to inform your customers who bought a young adult fantasy novel last month about a similar book that will come out soon. Nearly all POS systems will allow you to compose and send email which makes it a great email marketing and direct mail tool. You can take advantage of the information your POS terminal makes available to you by inquiring whether a specific customer was satisfied with his most recent purchase, adding a personal touch to the way you do business.


One of the best features of point of sales systems is the ability to run reports. They typically include standard reports such as gross sales, costs of products sold, and customer purchase history, among others. You can customize these reports or create new reports depending on the data that you need in order to keep track of how your business is faring. Some POS software allow you to add up employees’ hours, or automatically transfer financial reports to your accountant, eliminating the need to manually entering these types of information at the end of the day, week, month or year.