The importance of updating small business POS systems
Small businesses that sell goods often have to rely on a point-of-sale system to handle their daily transactions and keep track of their working capital. While not every small business needs a device like this – for instance, many professional services companies can probably survive without the need for a card reader – for other companies, such as retail stores, a POS system is an absolute must.
A point-of-sale system should be capable of performing several crucial tasks for helping a small business succeed. In addition to tracking and handling monetary transactions, the POS system should also include inventory management and cybersecurity features to protect the sensitive financial information transmitted during the exchange. Not having a solid POS system with these crucial features can ultimately hinder a company’s competitiveness. Upgrading a POS systems is important for small businesses to remain ahead in their fields and ensure long-term success.
As noted in by LinkedIn contributor Shmuly Preizler, a robust POS system should have the ability to perform most of, if not all of, these functions:
- Calculate accurate payments for every transaction
- Record payment methods
- Track money in the cash register
- Create regular sales reports
- Determine proper labor and payroll numbers
- Maintain inventory data
- Provide repeat customer information
Without these capabilities, small businesses will be quick to find that their competitors are utilizing the aforementioned functions to their advantages, which could spell trouble for those companies not using a robust POS system. In addition, just having a POS system in place doesn’t suffice – it’s crucial to ensure these systems are upgraded regularly.
According to a 2015 Capterra survey, 88 percent of companies have updated their POS software in the past five years, indicating that there is a good number of businesses that understand the need for maintaining an upgraded system. While this might seem like a high number of organizations making a big change in a relatively short period, the fact is that as technology improves, it’s also imperative for businesses to keep pace with these changes.
Who’s using POS systems?
Of the industries that use POS software, Capterra noted that at 36 percent, retail stores accounted for the largest user base, while restaurant/food services came in at 16 percent, healthcare/medical represented 9 percent, education 6 percent and all others were 33 percent. Of these users, the size of the companies varied tremendously. Incredibly, 70 percent of all respondents had revenue under $5 million, while those companies with $1 million to $5 million in annual revenue comprised 21 percent of all users – the largest portion of the respondents.
However, even companies with less than $1 million in annual revenue were big users of POS systems. In fact, 12 percent of businesses that made less than $100,000, 18 percent of those making $100,000 to $500,000 and 17 percent of businesses earning $500,000 to $1 million all used a POS system. With companies of all shapes and sizes constantly upgrading the software to handle their financial transactions, there’s no excuse for a small business to avoid using this technology.
Although it’s been a year since the Oct. 1, 2015, deadline by major U.S. credit cards issues for implementing EMV POS systems, there still has not been a full transition to these chip-and-pin POS systems. The Oct. 1 deadline changed the way banks and other financial providers respond to fraudulent charges. Companies that do not use an EMV POS system and end up having a fraudulent transaction take place will now be held liable for the customers’ losses. Upgrading the POS system to be EMV compliant eliminates this liability for companies and ensures they’re not losing money and shoppers due to outdated technology.
Include mobile options
It’s no secret that the world is increasingly moving toward a more mobile environment. Shoppers spend a great deal of time on their mobile devices and tables, and so do most of a small business’s employees too. According to the Capterra survey, less than half of all retail stores are taking advantage of a mobile POS system. However of this 44 percent of respondents incorporating mobile POS into their transactions, small to mid-sized businesses account for 79 percent. Some options to use cloud-based mobile POS systems include software such as Square or Bindo.
Consider alternative financing
While it’s vitally important for small businesses to upgrade their POS systems, one of the biggest obstacles to actually accomplishing this feat is a lack of working capital necessary to fund this overhaul. Although POS systems have become relatively cheaper in recent years compared to how much they cost a decade or two ago, these costs can still be prohibitive for small businesses with razor-thin profit margins. Thankfully, owners can take advantage of quick and easy access to capital with a small business loan from an alternative lender. With approvals in as little as 24 hours, organizations can get the funds they need to upgrade their POS systems overnight.