A point of sale (POS) transaction occurs when a customer pays for goods or services provided by a business. This can be when a client pays the bill at a restaurant or purchases clothes from a retail shop. Businesses must keep a record of all point of sale transactions to calculate how much revenue has been made over a given period.

Due to improvements in technology, automated points of sales transactions have become more affordable and economical for businesses of all sizes. If you own a small business, it is advisable to get an automated POS system. This is because they are more accurate and can be backed up, which prevents loss of information.

If you are considering switching to an automated point of sale transactions system, then read on for everything you should know about them.

Point Of Sale Transactions And Systems

When customers purchase goods or services, a record of the transaction has to be made. This is why all businesses need a POS System. A point of sales system is, in essence, an assembly of computers that record all the sales taking place at a business.

The method of payment recorded can be cash or credit/debit card. The POS system talks to the card payment machine, which communicates with the buyer’s bank to confirm that there are sufficient funds in the buyer’s card to purchase the item(s). All of which is automatically recorded within a few seconds.

POS systems generally include a barcode scanner or screen to input client orders, a credit card swiper, receipt printer and cash drawer. The system is then connected to a central database or server where all the information is recorded and backed up.

There are many types of POS systems. You can use the traditional cash registers that only monitored sales. There are also modern ones that can track sales, inventory, and individual employee performance.

Functions of POS Systems

Point of sales records helps business owners figure out how to manage their store to increase sales. They also assist with reducing stock wastage and becoming more profitable in general.

The inventory management system offered by modern POS systems is precious for small business owners. They depend on their system to alert them to when they need to stock a particular item. Before POS systems were invented, owners had to physically check their stock to determine which things need to be ordered.

pos transactions functions

The POS system also records which employee performs each transaction. This is valuable for training and disciplinary purposes. For example, it can show if a particular employee is always making mistakes when ringing up sales. It’ll also indicate if they may be stealing from the business. Additionally, it can show which employees make the most sales and which ones are underperforming.

Types Of POS Transactions

A point of sale transaction can occur online, which is when goods and services are purchased over the internet. It can also happen offline, which is when you buy something physically at a store. There are two types of transactions which will be discussed below.


Sales are a transaction that occurs when a good or service is paid for, and the seller receives the money. For each sales transaction, the POS system will record, as a minimum:

  • Product/Service sold
  • Transaction amount
  • The employee that sold it
  • Date and time

This information is kept for analysis to predict sales patterns, inventory status and to check for any improvements that can be made to the sales process.

pos transaction types


These are proof of purchases that are handed to a buyer after they pay for a product. Receipts contain information such as date and time of purchases, the quantity of the item or service purchased, return policy, etc.

Buyers keep the receipt for their accounting purposes. They are also used as proof of purchase if they need to return a faulty product to the retailer.

POS Reconciliation

Point of sale reconciliation is an accounting step that must be followed by retailers to ensure that the amount of cash in their cash register matches the number of sales for a given period. Daily POS reconciliation helps prevent accounting errors.pos reconciliation

It can make sure that the cash deposited every day is what was received and discovers any unauthorised point of sale transactions. Knowing the actual money received daily also helps you plan your business better as you will see the amount of cash available for business activities.

Advantages Of POS Systems

There are many benefits of using a point of sale transactions system. Here are a few below:

Identify Patterns

Analysing POS data can help you identify patterns in your business so that you can make better decisions. For example, if you run a restaurant business, POS data can show you which meals are most popular at certain times during the day.

This can help you with your menu planning and inventory management. POS data can also show whether employees need sales training or accounting training.

Better Customer Service

POS systems help you profile your clients well by providing them with better service. This is quite common in hotels. They use the POS system to record customer preferences whenever they purchase something. This may include food allergies, hotel room preferences, preferred wine, etc.

When the guest next checks into the hotel, they will be surprised when everything is set up according to their preference due to information from their previous stay.

Save Money

POS systems help you save money because they reduce cases of employee theft and negligence. Many business owners have found that the savings they made from switching to a POS system justified the cost of purchasing one.

save you money on epos

Is A POS System Right For Your Business?

Small business owners may be on the fence about whether or not they should invest in a point of sale transactions system. The short answer is that any modern business must use a type of POS system. New businesses may consider getting a cheaper version with fewer features than would be required by a large store.

Also, consider choosing a POS system that is backed up on the cloud to prevent any loss of information. Small business owners should also select a POS provider that has flexible subscriptions. This can give them the option to increase or reduce the number of features required depending on their business growth.

For more information on POS systems for your business, contact us today.