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POS stands for Point of Sales. POS transactions usually occur whenever a buyer pays a certain amount offline or online to purchase goods from a seller. The purpose of POS is to monitor and record all transactions between a buyer and a seller.
The best example of a real-life POS transaction would be a supermarket. For instance, while you’re at a retail chain, you pick up a few goods and proceed to the checkout counter. At the checkout counter, the supermarket staff scans your chosen products and creates a receipt or a bill. Then, whenever you pay for those items with cash or a card, a POS transaction occurs.
Point of Sales transactions is common in restaurants and diners as well. Imagine after completing your food; you pay the bill using your card, digital wallet, or cash. Then, the waiter swipes your card with a swiping machine, and that’s when the POS transaction happens.
Based on the medium through which the transaction takes place, POS transactions can be categorized into two major categories:
As the name suggests, online POS transactions occur whenever a buyer purchases some goods or services online. For instance, a buyer logged into the Amazon app and chose certain jewelry. Once the buyer makes the payment with a card or digital wallet, the POS payment happens. However, in Online POS Transactions, the seller has to wait for the cash as a request will be sent to the card-issuing bank for authorization or to debit the cardholder’s account.
Offline POS Transactions take place when a buyer visits a store physically and purchases a few goods. In this case, the seller gets the cash instantly.
In some cases, the buyer would like to return the product because of its quality or other possible issues. So, a request for reversal would be sent to the card-issuing bank; the reverse of payment could be partial or complete.
Now, let us understand how the day-to-day transactions are handled with a POS system and how cash is accurately reconciled from the POS payments.
POS systems consist of hardware devices and software that help sellers manage their
businesses by accepting payments.
Some sellers use a simple cash register as their POS system, while others use a much intricate network of POS that takes care of operations from inventory management up to the point of sale.
Once the payment is received from the point of sale, the sellers compare the POS data with the sales made per day/month/year to ensure complete accuracy and transparency in the process. In a nutshell, they compare the POS sales data with the cash inflows.
Every type of POS transaction must have the following elements to ensure reconciliation:
|Whenever a buyer buys a product, either online or offline, sales happen. The POS system closely monitors 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.||Whenever a buyer purchases goods and pays for the same, all purchase-related data is aggregated on the POS system.||After the buyer has made the payment, a receipt is generated by the seller for the buyer. The receipt includes the amount paid, the number of items purchased, date, and time of purchase.|
Now the question arises, how often should you perform a reconciliation? It’s best to reconcile pos payments daily. Sellers might face roadblocks in manually aggregating POS data daily; that’s why cloud-based POS systems are the future.
Major processors such as Moneris have enabled cloud POS devices for customers who can walk in and make card transactions. The card information could be saved for future use, and the data automatically flows in daily from the ePOS systems.
HighRadius Electronic Invoice Presentment and Payment (EIPP) Software provides tools that automate and speed up invoice communication and facilitate a faster collection of payments, enabling a closer and more convenient relationship with customers. It automates the invoice transmission and payment collection process providing a configurable solution that supports multiple invoice formats and different modes of transmission (fax, email, portal, etc.) depending on the targeted customer, its integration with ERP systems and a rich search capability enables efficient storage and retrieval of past invoices, backup attachments to minimize disputes and short pays. Apart from that it also has some key features that you would not want to miss out: level-III interchange and surcharge; self-service customer portal; invoicing across email, customer portals, post, and fax; advanced deduction management; and lightning e-payments. The result is faster invoicing and payment collection, better customer service, and improved profitability and cash flow.