How Does a POS System Work?

A point of sale (POS) system is used by businesses as a way to make transactions, record sales, and track inventory. Depending upon the system, there are a variety of other functions it can perform to accommodate the specific needs of a business.

While in the past, these were predominately used by larger companies and especially retail chains, they are now used by many small to mid-sized businesses as well. If you’re wondering how does a POS system work, here are the fundamentals and some common features.

Basic Components

The general setup of a POS system includes a server along with one or more terminals depending on how many checkout stations there are. There is a keyboard for entering data, a cash drawer, credit/debit card swiper, pin pad, and a receipt printer. Many companies also utilize some type of barcode scanner to input information quicker. There may also be a checkout scale, card reader, and customer display.

Some more recent systems offer touchscreens for a more streamlined experience. Mobile and wireless technology is a fairly new addition to POS systems and devices like tablets, iPhones, and Androids are starting to be used by more companies. This can be a cost-effective option for small to mid-sized businesses with limited needs and can be quite efficient.


These components will be used in conjunction with POS software, which will store information and allow it to be managed within a database. The specifics of software can vary considerably depending upon the industry. Some software can be used across numerous industries, while some is niche-centric. In terms of pricing, there can be a big disparity. Some basic platforms will only cost a couple hundred dollars, while others can be several thousand.


Within a software database, there are a multitude of functions that can be performed to manage many aspects of operations. For starters, you can keep track of sales to see the quantity of items sold and how much money was earned. This can be used to compile daily, weekly, monthly, quarterly, and annual reports with a high degree of accuracy.

Inventory management is another a key function that helps you know the quantity of items you have in stock. Having this feature is beneficial because it simplifies the process of keeping up with inventory. Rather than having to perform manual inventory counts, it can be done for you by the POS software. Every time a product is sold, the system is updated automatically. That way you’ll know whenever something is running low so it can be reordered in time to keep up with consumer demand.

A POS system can also be integrated into accounting to produce extensive financial reports. You can monitor the number of credit/debit swipes and how much money was earned through those transactions. This makes it much easier to keep up with tax reports than in the past and the likelihood of mistakes is reduced.

If your business has several employees, this system can be used to clock them in and out and keep track of the hours they work. This gives employees a convenient means of starting and ending their shifts and takes the guesswork out of monitoring their hours. Most systems are designed with simplicity in mind, so many have a limited learning curve and even new employees can figure out the basics with relative ease.

With all the features and customization a POS system can offer, it can be a sound investment for your business.

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  • Jasmine Straight

    I use livepos in my retail store and it works great for me. The features are very useful, it makes our work easy in our everyday transactions.

  • Jessly Guthrie

    We use livepos in our store and it works great for me. Every feature is helpful in our every operation.

  • Suzanna Baylor

    Livepos is the best pos for me. I’ve been using it for a couple of years now. It helped a lot in making my business successful.

  • charu sharma

    Its a good insight about point of sale. Order fulfillment is one of the critical component of supply chain process. There are many order fulfillment solutions available that may be combined to increase the effectiveness of the various order fulfillment activities. To know more about it one can visit:

  • Darla Foster

    I’ve been using livepos in my multi-stores and it makes our work easy. Their features are amazing.

  • Daisy Bennett

    I use livepos in my business for a couple of years now. It’s a great pos system for my stores. Everything is working great, the features are very helpful in every transaction.

  • Rishikesh Pillai

    HDPOS simplifies the accounting process and it make easy to look up past transactions . A POS software is very helpful for small business.

  • Marianne Blair

    For a couple of years using livepos my business has been very successful. A very easy to use and reliable system.

  • Stacey Boyer

    Livepos is the pos I’ve been using in my multiple location shoe stores. It has all the features I need to run my business smoothly.