Understanding a POS System and How It Works

POS System Hubtech

Do you operate a retail store? Having a wide range of marketing, management, and administrative skills is a must. You have to ensure the business has enough inventory (stock of goods), put together sales reports on a monthly basis, and manage the store generally. With a well-organized point of sale (POS) system, you will be able to run your operations smoothly. But just what is a POS? A POS is a system through which business processes payments by customers for services or products. In simple terms, with every purchase a customer makes in the store, he or she completes a point of the sale transaction. The POS is basically the nerve center of your business. Everything related to inventory, sales, and customer management merge at the POS. despite its many benefits, many retailers are yet to adopt the use of POS systems in their businesses. It is because of a lack of understanding that many retailers still use manual methods, QuickBooks, cash registers, and excel. Many retailers loathe the idea of implementing new technology simply because they are scared and overwhelmed with having to overhaul their systems. Some have never stopped to consider how they negatively impact their businesses by failing to put in place a POS system. That’s why understanding the meaning of POS, its components in terms of hardware and software together with its capabilities is key in enabling you to decide if you really need to buy one.

Let’s Take A Look on How You can Understand a POS System and How It Works

POS System Hubtech

Hardware Components of a POS System

To set up a POS system, there are certain hardware components which you must just have. They include the following:

  • Monitor/tablet. Its work is to display the product database and enable numerous other functions including the display of sales reports and employee clock-in. as technology improves, bulky monitors are being replaced with smaller tablets.
  • Barcode scanner. What this does is to automate the checkout process. By simply scanning barcodes, you are able to capture information about the product, adding it to the checkout totals. It is also possible to integrate barcode scanners with inventory management systems in order to automatically adjust stock levels.
  • Credit card reader. Since 2015, the EMV payment standard has been in use across the world. As such, businesses need to install EMV-compliant card readers that are also secure. This is usually made a part of the POS system to prevent fraud that may occur in the process.
  • Receipt printer. Regardless of how popular text and email receipts have become, paper receipts are not about to die. They are a convenient way of the customers getting a glimpse of the purchase as well as returns.
  • Cash drawer. Regardless of the advances made in technology, cash is still king. A cash drawer is secure enough to store it for transactions. When you receive payment in cash, you will avoid the fees charged on credit cards.
  • Network devices. It is necessary to set up a network to provide an internet connection to your POS regardless of whether it is cloud-based or in-house. That way, you will be able to link the POS to the rest of your computer system. It could be anything like a modem, router or hub linking various local computers.

Software Components of a POS System

POS software is an application that enables you to run the important daily operations of the business. It is the determining factor in how good your POS system is going to be. In it, you will see all the features, capabilities, and functionalities of the POS. It is the function that connects the hardware to the back office. Without software, a POS system will not function properly. When it comes to picking a POS software, you have a choice between an on-premise POS or cloud POS. The on-premise POS is basically a software for which you are required to buy a license. You will then install the software on a computer system. To maintain the software, you have to keep updating it from time to time. Since it is hosted on in-house computer systems, the software may require monitoring by IT personnel if you have a large organization. However, you can only use it if you have the right hardware, which can be expensive to buy. On the other hand, a cloud POS operates through the access of software stored on remote servers through any device. Since it is hosted by a third-party provider, the task of updating or upgrading software does not fall in your hands. For the cloud POS, you don’t require an entire IT department. Rather, it can be managed by 1 or 2 individuals. Compared to on-site POS, these types are less costly when installing it for the first time. POS System Hubtech

How Does POS Software Work?

The software usually makes it possible for an employee to scan the items being sold at the check-out point. When the items are scanned, they are deducted from inventory. These will be included in sales reports in terms of items, department, and tender. Any customer who is tied to the order, as well as the modifiers and discounts, are reported. In the end, the sales data will be included in the analytics dashboard, transaction reports, and shift summary. Also, the system tracks the customers’ purchases together with the contact information and can be used to design marketing strategies to get more business. It can, as well, be used to integrate customer information and loyalty programs. Also, a POS system will integrate the purchase management function. As soon as the items are added to a completed transaction, they are removed from inventory thus helping you to know the kind of items you need to replace. Importantly, a POS will process the payment, whether it is cash, a debit card or credit card.


It is clear that every retail business owner needs a functional POS. Apart from making your work easier, it will process transactions and produce reliable reports on which you can rely to make decisions. If you have never thought of getting a POS system, time is now.