How Do POS Systems Work?

by Billie Nordmeyer; Updated September 26, 2017
Smiling woman paying for coffee by credit card

Systems can help almost any employee perform his work better and faster. Available for practically any area of your operations, these systems help you save a few minutes here and there, which results in lower costs and enhanced service. For example, point-of-sale systems save you time by capturing real-time data on purchase transactions and providing estimates of market share and product sales.

System Components

The primary component of a point-of-sale system is a central processing unit that executes software and processes data, which it stores on a hard drive. Other POS system components include a display screen that may grant access to certain data using touch-screen technology, a keyboard for data entry and a mouse for making selections on a computer screen. You can connect a printer to the system to print receipts and a cash drawer for storing cash, credit card receipts or gift certificates. The POS system also may incorporate a credit card reader.

POS Transactions

Point-of-sale systems can calculate and track order tickets, process credit and debit card payment, print receipts and complete cash exchanges. Sales reports the system can process include average check amount, sales category average sales and customer totals. The POS system also creates sales trends reports, such as a restaurant's sale of desserts or alcohol over time, and sales performance reports by shift, employee or work station. You can use the data to analyze sales history by season to adjust your buying decisions.

System Integration

The point-of-sale system can integrate with an inventory system, employee scheduling system and employee time tracking system. It also can integrate with a reservation system and input-output devices, such as a bar code reader, check reader or magnetic strip reader. You can connect it with a computer system you can use to communicate with vendors, customers and staff or perform functions, such as menu planning or accounting, purchasing, inventory control and financial planning.

POS System Support

When point-of-sales systems go down, it can be costly to a business. Consequently, companies sign up for system support that may include phone assistance during business hours. Some service contracts also provide a guaranteed response time, which means a field technician will appear at your place of business within a certain number of hours. You also can contract for guaranteed resolution times, such as within 24 hours.

About the Author

Billie Nordmeyer works as a consultant advising small businesses and Fortune 500 companies on performance improvement initiatives, as well as SAP software selection and implementation. During her career, she has published business and technology-based articles and texts. Nordmeyer holds a Bachelor of Science in accounting, a Master of Arts in international management and a Master of Business Administration in finance.

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