How point of sale software works and how it helps your small business

Published Wednesday 5 November 2025

Table of contents

• What is retail POS software?
• A good POS system is crucial in retail
• Take the checkout to your customers with mobile POS
• Make your employees better at sales
• Give customers peace of mind
• Simplify inventory management
• Understand your customers and increase sales
• Get more control of your business with online retail POS
• Run your retail business with confidence
• FAQs on POS software

Key takeaways

• Implement a modern POS system to streamline your retail operations by processing payments, tracking inventory in real-time, and managing customer data all from one centralized platform.

• Utilize mobile POS capabilities to eliminate traditional checkout counters and reduce customer wait times by processing sales anywhere in your store using tablets or smartphones.

• Leverage customer data integration to track purchase history, preferences, and buying patterns, enabling you to offer personalized service and automated rewards that increase customer loyalty and repeat visits.

• Choose cloud-based POS solutions that connect with your accounting software to gain real-time financial insights, automate inventory reordering, and access your business data from anywhere with an internet connection.

What is retail POS software?

Point of sale (POS) software is the system you use to manage sales transactions in your retail store. It’s a modern cash register that also tracks sales, manages inventory, and helps you understand your customers.

It works with hardware like barcode scanners and card readers to process sales, but its real power is in how it connects to the rest of your business. A good POS system helps you track sales, manage inventory, and understand customer behavior, all from one place. This means you spend less time on administrative tasks, such as organizing financial data for official requests, and more time growing your business.

A good POS system is crucial in retail

POS systems are software solutions that process sales transactions and manage retail operations. They eliminate manual checkout processes that slow down customers and reduce business efficiency.

Modern POS systems help you do more than process payments. Here’s how they can help your business:

• Track what sells and what does not so you can optimize stock levels
• Identify which product lines generate the most revenue
• Understand buying patterns to improve your marketing
• Give your staff mobile access to product catalogs and information

Take the checkout to your customers with mobile POS

Mobile POS systems let your staff process sales anywhere in your store using tablets or smartphones. This eliminates traditional checkout counters and reduces customer wait times.

Mobile POS systems help you serve your customers faster and more flexibly:

• Process payments anywhere in your store
• Approach customers directly instead of waiting at the counter
• Handle card payments and email receipts instantly when you connect your POS to your accounting software

Make your employees better at sales

POS systems help your staff sell more by giving them product information on the spot. This helps your team feel more confident and helps you sell more to each customer.

Key sales enablement features include:

• Access complete product details, specifications, and pricing
• Get automated suggestions for related and complementary products
• Use built-in tips and talking points for each product
• Track which staff members are top performers and who needs support

These features help you increase your average sales and spot where your team needs more training.

Give customers peace of mind

A secure POS system protects your customers’ payment data and builds trust when you take payments on mobile devices. Modern systems help you address any concerns about smartphone and tablet payments.

Key security features include:

• Hide app screens so your devices look like dedicated payment terminals
• Use bank-level encryption to protect customer and payment information
• Meet industry requirements for safe payment processing and keep records as required by tax regulations

Simplify inventory management

POS inventory management helps you avoid running out of stock or having too much inventory. You get real-time visibility into how your products are performing.

Core inventory benefits include:

• Sales tracking: Identify best-selling and slow-moving products automatically
• Seasonal insights: Understand which products sell better on specific days or seasons
• Price optimization: Analyze the relationship between pricing and sales volume
• Reorder automation: Get alerts when stock levels require replenishment

When you connect your POS to your accounting software, you get deeper financial insights. You can also keep accurate records in case authorities like the IRS request backup files during an examination:

• See which items generate the highest margins
• Optimize your ordering schedule to keep your cash flow healthy
• Track how your inventory decisions affect your business performance

Understand your customers and increase sales

POS systems that connect with customer relationship management tools help you use customer data to increase sales. You can track purchase history and preferences to offer personalized service and build loyalty.

Customer intelligence features include:

• Access complete buying patterns with a simple name lookup
• Track favorite products, sizes, and seasonal purchases
• Automate rewards based on spending patterns and visit frequency
• Send personalized offers based on each customer’s behavior

This helps you spend less to attract new customers and encourages your existing customers to come back more often.

Get more control of your business with online retail POS

Cloud-based POS systems now give you the same tools that large retail chains use. You can manage sales, inventory, and customer data all in one place.

Key advantages of integrated cloud POS include:

• Manage POS, accounting, customer data, inventory, and loyalty programs in one place
• Access your business from anywhere with an internet connection
• See sales, inventory, and customer data instantly
• Pay only for the features you need as your business grows

Modern retail POS software helps you avoid inventory mistakes and customer service issues that can hurt your profits. If you are not using an integrated POS system yet, affordable cloud-based options can help you streamline your operations and grow your business.

Run your retail business with confidence

The right retail POS software helps you save time, simplify your inventory, and understand your customers. This lets you make better decisions and grow your business.

Xero accounting software connects with leading POS systems to give you a real-time view of your finances. You can streamline your operations and get one month free when you sign up.

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FAQs on POS software

Here are common questions and answers small business owners might have about point of sale software.

What is point of sale software?

Point of sale (POS) software is a digital system that lets you manage and process sales transactions. It works with hardware like barcode scanners and card readers to help you complete sales, track inventory, and manage customer data.

Can I use Excel as a POS system instead?

You can use Excel to track sales, but it is not a true POS system. Excel does not automate tasks, track inventory in real time, process payments, or provide detailed reports. Manual tracking can lead to errors and takes more time, especially if you need to provide records for a tax examination that can cover a fourteen-month period.

Are there free POS systems available?

Yes, you can find free POS software plans. These are often best if you are just starting out. You usually get basic features for processing sales and managing inventory, with options to upgrade as your business grows.

How secure is POS software for customer payments?

Reputable POS software uses encryption and follows payment card industry standards to protect your customers’ data. This makes your transactions more secure than using manual systems. Make sure you choose a provider that puts data security first.

What hardware do I need to get started with POS software?

The hardware you need depends on your business. Most retail stores use a tablet or computer, a cash drawer, a credit card reader, and a receipt printer. You can also use a barcode scanner to speed up checkout.