Definition: A computerized network operated by a main computer and linked to
several checkout terminals
Inventory software programs now on the market let you track
usage, monitor changes in unit dollar costs, calculate when you
need to reorder, and analyze inventory levels on an item-by-item
basis. You can even control inventory right at the cash register
with point-of-sale (POS) software systems. POS software records
each sale when it happens, so your inventory records are always
up-to-date. Better still, you get much more information about the
sale than you could gather with a manual system. By running reports
based on this information, you can make better decisions about
ordering and merchandising.
With a POS system:
- You can analyze sales data, figure out how well all the items
on your shelves sell, and adjust purchasing levels
accordingly.
- You can maintain a sales history to help adjust your buying
decisions for seasonal purchasing trends.
- You can improve pricing accuracy by integrating bar-code
scanners and credit card authorization ability with the POS
system.
There are plenty of popular POS software systems that enable you
to use add-on devices at your checkout stations, including
electronic cash drawers, bar-code scanners, credit card readers,
and receipt or invoice printers. POS packages frequently come with
integrated accounting modules, including general ledger, accounts
receivable, accounts payable, purchasing, and inventory control
systems. In essence, a POS system is an all-in-one way to keep
track of your business's cash flow.
Features to consider in a POS system include the following:
- Ease of use. Look for software with a user-friendly
graphical interface.
- Entry of sales information. Most systems allow you to
enter inventory codes either manually or automatically via a
bar-code scanner. Once the inventory code is entered, the systems
call up the standard or sales price, compute the price at multiple
quantities and provide a running total. Many systems make it easy
to enter sales manually when needed by letting you search for
inventory codes based on a partial merchandise number, description,
manufacturing code or vendor.
- Pricing. POS systems generally offer a variety of ways
to keep track of pricing, including add-on amounts, percentage of
cost, margin percentage and custom formulas. For example, if you
provide volume discounts, you can set up multiple prices for each
item.
- Updating product information. Once a sale is entered,
these systems automatically update inventory and accounts
receivable records.
- Sales tracking options. Different businesses get paid in
different ways. For example, repair or service shops often keep
invoices open until the work is completed, so they need a system
that allows them to put sales on hold. If you sell expensive goods
and allow installment purchases, you might appreciate a loan
calculator that tabulates monthly payments. And if you offer
rent-to-own items, you'll want a system that can handle rentals as
well as sales.
- Security. In retail, it's important to keep tight
control over cash receipts to prevent theft. Most of these systems
provide audit trails so you can trace any problems.
- Taxes. Many POS systems can support numerous tax
rates-useful if you run a mail order business and need to deal with
taxes for more than one state.
Perhaps the most valuable way POS systems help you gain better
control of your business is through their reporting features. You
can slice and dice sales data in a variety of ways to determine
what products are selling best at what time, and to figure out
everything from the optimal ways to arrange shelves and displays to
what promotions are working best and when to change seasonal
promotions.
Reporting capabilities available in POS programs include sales,
costs, and profits by individual inventory items, by salesperson,
or by category for the day, month and year to date. Special reports
can include sales for each hour of the day for any time period. You
can also create multiple formats for invoices, accounting
statements and price tags. Additional reports include day-end cash
reconciliation work sheets and inventory management. Examine a
variety of POS packages to see which comes closest to meeting your
needs.
Every business is unique; you may find that none of the
off-the-shelf systems meets your requirements. Industry-specific
POS packages are available--for auto repair shops, beauty and nail
salons, video rental stores, dry cleaners and more. In addition,
some POS system manufacturers will tailor their software to your
needs.