Point-of-sale (POS) systems have come a long way from the cash register days. Modern POS systems can serve as the hub of your retail business, enabling you to oversee most aspects of your operations from one solution.
You can accept payments and track sales, costs, inventory, customers, and employees. Real-time analytics and reporting features give you the ability to harness this data for your business decision-making. And a POS system can save you hundreds of hours in error-prone manual data entry and accounting.
With all these benefits in reach, it’s worth it to spend some time getting to know your POS system. In this article, we’ll unpack the built-in features and app integrations that make POS systems one of the best tools for managing payments and finances.
Here’s how to use your POS system to the fullest.
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Key financial tools included in most POS systems and why they matter
Monitoring business finances should be top-of-the-list for any business owner. The good news is that the right POS system can do most of the hard work for you. Below, we’ll cover the core features you can use to optimize tasks and even improve your bottom line.
The primary purpose of a POS system is to ring up sales and process payments. Most POS systems accept credit card, debit card, cash, and check. With the sharp growth of mobile payments, like Apple Pay and Google Pay, and rising payment options, like buy now, pay later, POS systems are accepting more payment methods all the time.
Pro tip: See if your POS system supports mobile payments, buy now, pay later, layaway, loyalty programs, or gift cards. These additions could unlock new revenue or boost your customer retention rate.
Beyond taking payments, many systems also monitor your sales and generate reports to help you better understand trends and peak sales periods.
Diligent inventory management is key to preventing oversights, shrinkage, and overspending. Inventory tools in POS systems automate the process entirely, from inventory counts to tax time.
Many systems automatically update your stock levels when a sale occurs, so there’s less to do when it’s time to reconcile your accounts. You can also see your cost of goods sold (COGS) for all of your products and services, or examine COGS at the individual product level, to keep an eye on spending.
What’s more, POS systems make it easy to see which products are actually making you money, so you can make decisions to improve your profitability.
Some POS systems let you add vendors directly to your POS. You can set up low-stock alerts and automatic reorders to save time. Altogether, a POS helps you maintain the right amount of products and raw materials and minimize mistakes. This, in turn, helps you stay in a healthy financial position.
Sales reporting and analytics
Your point-of-sale (POS) system collects data, so you get access to sophisticated, by-the-minute retail analytics. Reports take these business numbers and turn them into easy-to-understand insights.
Pro tip: You should pull reports daily, weekly, monthly, quarterly, and annually to effectively monitor the financial health of your business. Many POS systems offer one comprehensive daily report that summarizes what you need to know.
Depending on the level of detail you want, you can see overall trends or drill down to specifics. You’re able to view key performance indicators (KPIs) in real time, such as profit margin, top-spending customers, and sales by category, location, and employee. There are five categories of standard reports you can take advantage of:
- Sales by date, employee, product, category, etc.
- Average order value
- Best- and worst-selling items
- Most commonly returned items
- Cost of goods sold
- Gross profits
- Payment method used
- Taxes paid
- Tips and gratuities
- Voided sales and refunds
- Refunds, returns, and discounts
- Number of hours worked
- Sales and commissions by employee
- Profitability by employee
- Shift reports
- Real-time inventory tracking report
- Inventory reorder report
- Inventory value report
- Purchase amounts by customer
- Top customers
- Purchase and return histories per customer
- Searchable customer database
Altogether, these reports highlight your business performance, financials, strengths, weakness, and opportunities.
POS systems can truly become a one-stop shop for payments and financials thanks to software integrations. You can connect other business management tools — like accounting, expense-tracking, payroll, HR, and marketing software — and sync up different aspects of your operations.
Pro tip: Ask your payment processor or POS system provider if they have any preferred partners for software solutions or integrations. You may be able to sign up for software at a lower price.
When it comes to managing your payments and financials, there are two important POS integrations: integrated payments and accounting software.
Integrated payments refer to when you connect your POS system with your payment processor, and it unlocks a variety of benefits.
Mainly, it speeds up checkout and improves payment security. When your point of sale solution and payment processor are connected, payment data flows smoothly from one system to the next. There's no need to spend time manually keying in card or customer details because that data automatically transfers from your payment processor to your POS.
Integrated payments eliminate the need to do manual end-of-day reconciliations, which saves time and minimizes human error.
Lastly, payments make it easier to generate financial insights. You can easily view your customers’ preferred payment types and it’s simpler to audit transaction fees to determine if you can save money in payment processing.
Whether you’re handing your books in-house or have an accountant who looks after your finances, integrating your accounting software with your POS system makes everyone’s lives easier.
Transactions flow seamlessly between the two platforms, so you’re able to eliminate hours of data entry and reduce inaccuracies, while seeing more accurate financials overall. A tight POS and accounting software integration also makes tax season less of a pain. You can generate income and expense reports at a click of a button, so keeping your finances in check is a breeze.
The good news? Most POS systems are compatible with highly rated options like QuickBooks and Xero.
Payroll and staff management integrations
Payroll is a significant expense for any retailer that has a team to help them run their business. Having a POS system that’s integrated with your payroll or HR system simplifies wage and tax calculations, commissions, etc.
In addition, connecting your POS with your payroll or employee management solution makes it easy to budget for labor costs. By tracking your peak hours for sales, you’re able to make data-backed decisions for shift scheduling and staffing expenses.
Investing in a modern POS system makes financial sense
As you can see, a point-of-sale system provides easy tools for day-to-day transactions and big-picture financials. With the right POS system and financial integrations, you’ll be able to use your dashboard and reports to keep a finger on the pulse of your business at all times. In doing so, you can spend less time reconciling records or doing manual calculations, and devote more energy to serving your customers and growing your business.
The bottom line? Having a modern POS system helps your business become more financially fit. Not only do you have access to tools that make financial management much easier, you’ll also increase your efficiency and free up time that you can use to make even more money.