How Does Point of Sale (POS) Software Work

POS software is a structure for face-to-face clearance from customers. This article talks about the software system of this structure. 
POS software

Point of Sale has software and hardware components. The software component is what processes, registers, and saves the details of transactions. However, different POS systems have distinct patterns of registering, operating and keeping transaction data.

POS software works by helping you track inventory, reduce paperwork, and market your product to your customers via a straightforward process. Read on to learn more about how POS software works, as well as the different categories and types available.

What is POS software?

POS software is what business owners use to run sales themselves. Occasionally, a computer, a tablet, or a cash register in which cashiers conduct financial transactions, tally product cost, and input products. A lot of POS software also keeps many things in balance by interacting with the inventory area.

There are cloud-based POS and traditional POS solutions. These days, many retailers are shifting away from traditionally built systems. Most businesses have POS solutions customized for the needs of their business, some of which are expensive and complex.

How Does POS Software Works?

In answering how POS software works, we have to touch on its setup, data entry, customer marketing, inventory management, and reporting.


POS system consists of one or multiple terminal stations, a central server, a cash drawer, one credit card swiper, and a receipt printer. You may request a bar code scanner based on your type of business.

The company sets up your POS system. It also teaches you how to use it. This includes both your hardware and software.

Data Entry

A lot of POS software permits you to pull up your customers by either customer number, phone number, or name once they have once been interred in the system. This saves you quite some time eventually.

POS software has inventory management facets. With this feature, you can enter new inventory with one-click instead of monitoring the products by hand.

Inventory Management

This section of POS software can be as specific or as general as you desire. You can know the exact automobile parts that are available and the same place where they are stored. However, you must first input them into the system when they are delivered to your shop. After that, whenever you utilize a part, minus it from the inventory.

Advanced POS systems make this procedure even simpler by automatically subtracting used parts from your inventory. They also give you alerts when specific inventory products get low and need to be restocked.

Customer Marketing

You can create more straightforward market strategies for your business by tracking the purchases made by your customers, along with their contacts.

Many POS software permits direct mail reports and email marketing. It is also supportive in physical communication with your customers such that you can see past transactions of customers when they come in again. And ask if they were satisfied with their previous transactions. This will help you know how to serve your customers better and thus keep them coming back.


A significant facet of POS software is its ability to carry reports. Financial reports can automatically be moved from your separate financial monitoring software or to your accountant. In this case, there will be no need to enter each paper transaction at the close of each day. You also will not need to add up staff hours, as most POS software lets employees clock in and out every day.

Categories of POS

Present-day POS systems possess a backend or dashboard side and a frontend interface. The backend side is for management purposes and analytics that take place behind the scene. It can be accessed independently in an application window or browser, either on a separate or the same computer. While the frontend interface is usually on a tablet screen or touchscreen monitor. It is for the employee to process the transaction.

Your type of POS system, notwithstanding, both the frontend and backend, will be connected. However, there are two means that data can be saved; On-site and Cloud-based.



Here, you can access your stored data from any computer browser because data are saved on your provider’s internet server.  

In other words, the software is installed online.

Here, the software is hosted locally on your server. It means that data are stored in your computer’s storage location and can only be accessed from your computer.

Your POS provider automatically maintains and updates. Hence this software can be referred to as a SaaS. (Software-as-a-Service)

Requires manual updates and maintenance

Requires internet.

The software runs on your closed computer network and does not require internet.

No extra software purchases are required.

You will need to buy one or more software licenses.


The Different Types of Point of Sale Software

Various types of POS fall into either the cloud-based or On-site categories.

1. Multichannel POS

This type of POS can integrate with different business channels. This is an excellent feature for POS software to possess. Tracks such as your store, your website, pop-up shops, third-party e-commerce marketplaces, social media, wholesale, event sales, and more.

This type of POS works best for online business owners who sell by themselves.

2. Retail POS

Retail POS has facets that are designed for brick-and-mortar product selling businesses. These facets include forecasting, inventory management, multichannel selling, and forecasting.

Retail POS is excellent for long-lasting brick-and-mortar businesses in a traditional retail setting.

3. Tablets

This type of POS can be both docked to a station and mobile. Tablet POS run on iPads or Androids tablets, which perform either as a supplement for your central POS station or as the main POS. This type of POS can also be referred to as a Mobile POS.

Tablet POS is fantastic for pop-up shops, selling products with plenty of details and facets, event sales, and collecting customers’ data at the site of purchase.

4. Desktop

Desktop POS is typically in the category of On-site POS. Depending on the hardware you choose, desktop POS is one of the most reliable and powerful types of POS. However, they are bulky. They are the main POS in the long-term. Brick-and-mortar store.

Desktop POS run in a retail environment. They are excellent for food-based marketing. They are digitally sagacious. It also helps in reducing wait time and lines.

5. Mobile POS

This type of POS is capable of moving around both outsides and inside a store. Business owners can carry transactions wherever they need to be or from the main purchase point like cash register. To process transactions on the go, retailers need to use hardware like a smartphone or a tablet.

Mobile POS is best for pop-up shops.

6. Restaurant POS

This kind of POS software is built for food-based businesses. Some of its facets include dish customization, menu planning, costing, self-serve ordering, and ingredient-level monitoring.

Restaurant POS is perfect for food-based businesses like cafes and all kinds of restaurants.

7. Open-source POS

This type of POS permits companies to build custom solutions using their source codes. You can build your own open-source POS either with external collaborators or internally.

Open-source POS is excellent for businesses with plenty of technical resources.

8. POS Apps

There are quite some POS apps to pick from, depending on the POS. POS apps help you manage your business operations and access your data by working with compatible devices and your hardware.

POS apps are fantastic for businesses that desire customization and flexibility without the need for a technical budget.


Point of Sale system is not a free-standing process or machine. It is an array of things that collectively allow you to operate customer-facing proceedings competently. POS software works by helping you track inventory, reduce paperwork, and market your product to your customers through a straightforward process. There are various kinds of POS, best for different businesses.  We hope that we have answered your question on how POS software works.

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