POS stands for point of sale: the moment, and the place, where a customer pays. POS software is the program that runs that moment. At first glance it looks like a digital cash register, but most of its value is in what it records while the customer is paying.
What happens during a sale
A typical sale in POS software has five steps:
- Find the product. The cashier scans a barcode, searches by name or taps a product on a touch screen. The price, tax and unit come from the product catalog, so nobody has to remember them.
- Build the cart. Quantities, units (piece, box, carton) and allowed discounts are applied. The total updates as items are added.
- Take payment. Cash, card, wallet or a mix of methods. For cash the change is calculated; for regular customers the sale can be paid later or in part.
- Print the receipt or invoice. A short receipt for walk-in customers or a full invoice for business customers.
- Record everything. The sale is saved with its date, branch, cashier, customer, items, cost and payment.
What happens behind the scenes
The last step is where POS software differs from a simple billing tool. Because every sale is recorded line by line, the system can:
- reduce the stock of every item sold in the branch where it was sold,
- warn you when a product falls below its reorder level,
- update the customer's balance and purchase history,
- work out the profit of each sale from the purchase cost,
- and add the sale to daily, product, tax and staff reports.
The same happens in reverse for purchases (stock goes up), returns (stock and money go back) and stock transfers between branches.
Cloud POS versus installed POS
Older POS systems were installed on one computer at the counter, with the data on that machine. Cloud POS software runs in a web browser and keeps the data on a server. That means the owner can check sales from anywhere, several counters and branches share the same catalog and stock, updates arrive without reinstalling, and a broken computer does not take the data with it. A good cloud POS still keeps cash sales going during a short internet outage and syncs them afterwards.
What POS software usually includes
- Billing, receipts and invoices
- Product catalog with barcodes, units and variants
- Inventory and stock management per branch
- Purchases and supplier payments
- Customer accounts and credit
- Users, roles and permissions
- Reports: sales, stock, expenses, tax, profit and loss
Some businesses need more: batch and expiry tracking in a pharmacy, tables and a kitchen display in a restaurant, serial numbers in an electronics shop. Look for POS software that switches these on for your kind of business instead of making you buy a different product.
Do you need POS software?
If you hold stock, employ even one cashier, give customers credit or want to know your real profit, the answer is usually yes. You can try it without risk: Dynamic POS software has a free plan, and the live demo opens a ready-made shop with sample data.