The robust progress in the IT industry during recent years has also evolved businesses. With the introduction of advanced software and hardware technologies, the records associated with any business are recorded digitally. The electronic maintenance of records saves resources, is more reliable and can be backed up with a minimum chance of data loss.
The Point of Sale Systems has been specifically designed to keep track of all the sales, inventory records, POS transactions, employee profile management and all other activities being carried out in a retail store. Popular POS systems aiding business in improving their sales include Shopify, Lightspeed, Shopkeep, Magestore, etc..
What is POS Transaction?
The POS transaction takes place when a payment is made by a customer at a cash counter or online store in exchange for products or services provided to them. In general terms, a point of sale transaction occurs whenever an activity involving the conversion of assets, liabilities or equity occurs.
The exchange of cash and goods can occur in any medium depending upon the nature of business or store from which the purchase is being made. The transactions involve two user roles i-e a buyer and a seller. The systems comprising of software and hardware which keep track of these transactions are termed as POS or Point of sale systems.
As a result, any monetary exchange taking place through a cash counter integrated with a POS software and hardware is known as a Point of the Sale transaction. The POS system is purchased by the retailers to keep an eye on the number of transactions being made on a daily, monthly or annual basis.
The POS systems are also responsible for calculating the amount of cash generated each day on sales of different product. Other amazing features include inventory management, POS report generation, employee profile management, stock management, predicting stock requirements, etc.
Utilizing a POS system for recording and monitoring of Point of Sale transactions helps the retailers and sellers in maintain reliable records and measure the progress of their businesses in an effective manner.
These systems also help the sellers in devising strategies to improve sales by looking at the demand and sales of each product and the impact of sales procedures already implemented and generating POS reports in accordance to the input data.
POS Transaction Types
Each sale or purchase involves the transaction of money but the medium through which this money is being transferred can vary in different cases. The two major categories of POS transactions are mentioned below along with precise descriptions:
The POS transactions which occur while making a purchase from an online retail store belongs to this category. In this case, the store is not physically present, but the buyers can view product details online and order desired products which are delivered to their doorstep in some time. The Point of Sale Transaction occurs when the buyer enters his/her credit card information and the money is transferred to the seller in the online category. In the case of unsatisfying product quality or faulty items, the amount is also refunded to the customers in some cases.
When a buyer visits a store, chooses certain items and makes payment at the cash counter on which a POS is installed then this category is termed as an offline Point of Sale transaction. In this case, the money is directly received by the buyer without any delay.
These online and offline transactions are further categorized into three different types:
When a product or items is sold whether it’s a physical store or online retail shop then this type of transaction takes place. In both cases, the cash or payment is directly received by the seller. The number of products sold, the amount of cash received, the date and time of purchase, the employee handling the sale and the customer information are recorded in the POS system in order to monitor these factors for future predictions.
This Point of sale transaction occurs when a buyer purchases a product from any medium and its return makes a payment. All the information associated with the purchase is recorded on the POS system.
After the buyer has successfully purchased his desired products a receipt is generated for the esteemed customers which contain details like the amount of cash paid, number of products, name of items purchased, date and time of purchase, etc. This receipt is handed to the customer so that they can also keep track of the purchases they made at a retail store.
What is POS reconciliation?
The term POS reconciliation is becoming extremely important in small and large businesses and it is used when the accounting records of POS data sets are compared with each other. This is done to ensure that the recorded data and accurate.
Point of sale reconciliation is also explained as the calculations made to verify that the amount of cash in the cash counter is equal to the number of sales made on that day/month or year.
How is POS reconciliation related to POS transaction?
The POS reconciliation and POS transactions are closely related to each other as both are used to verify each other’s data. The data extracted with the reports generated in a Point of sales system is cross-checked through Point of sale reconciliation methods. As a result, the inflow and outflow of cash are recorded perfectly.
Benefits of POS reconciliation
Eliminate accounting errors
The POS reconciliation methodology removes any possible human errors in the calculation of finances and helps you analyze data is an accurate manner.
Secure business deposits
The cross-checking carried out during this procedure also helps you to be sure about the cash amount reserved in your account so that the future investments or purchases can be predicted in an accurate manner.
The Point of sale reconciliation process also accelerates stability in the management of your business-related finances. The exact estimation of available cash helps you plan ahead of time and carry out your tasks smoothly.
Identify unauthorized transactions
The double check of all the sales and purchase related finances also helps you identify the transactions which are not authorized and minimize the risk of unnecessary cash outflow.