The Sunday Mail
Entrepreneurship Matters
Dr Kudzanai Vere
Statistics point to the ever-growing informal sector and its contribution to the economy, especially after the 2008 economic slump.
What is, however, disturbing is the snail’s pace at which this sector is acquainting itself with formal ways of doing business, and, to be more specific, the adaptation and full use of the point-of-sale (POS) system.
The presence of the relevant hardware, coupled with the POS software, in your shop does not guarantee efficiency, nor does it mean your business is on a growth trajectory.
These systems are as good as their users. The quality of the output that you get from these systems depends primarily on the quality of the input.
What is a POS system?
POS refers to a point of purchase or a physical place at which customers make payments. At such a point, we used to have manual receipt books, but we evolved to cash registers and now POS machines and systems. With the introduction of bar codes in the 1970s, graphic interfaces in the 1980s and automated payment systems, fully comprehensive POS systems later emerged. What then is a POS system? POS is now far from a cash register. It has come a long way and has become a business enhancer, thanks to rapid innovations happening in business every day.
A POS system is not just the digital version of a cash register. It has turned out to be a one-stop solution that addresses all diverse business needs and helps automate the process, simplify the operations and service customers well.
The POS system helps streamline operations — purchasing, inventory management, sales, customer management and accounts – by integrating with hardware devices like payment terminals, magnetic card readers, weighing scales, barcode scanners and printer. It, thus, acts as a powerful tool for running a business successfully.
Purchasing
Once installed, the system will obviously not have information on stocks with regard to your products and services. Initially, you have to capture what you would have received from suppliers into the system through the goods-received voucher (GRV) option, depending on the terms used on your POS system. As you enter these into the system, most POS systems have an option of putting reorder quantities, including minimum and maximum stock quantities. These will necessitate the production of reports showing stocks that need to be replaced.
Most of these small and medium enterprises (SMEs) find it tedious to put all this information, which explains why they do not get the necessary management reports. They use the physical inspection method, instead.
Inventory management
Inventory management refers to the process of ordering, storing, using and selling an organisation’s stock. This includes the management of raw materials, components and finished products, as well as the warehousing and processing of such items. In the absence of a system that assists in managing these, it will be cumbersome, requiring a number of clerks to do it. The advent of POS systems made this process easier.
Most modern-day systems can handle stocks of various types, from raw materials to finished goods. These systems also give you the number of days your stock has been in the shop for your planning purposes, that is, if you have set them to do so. Inventory is managed in various ways depending on the type of stock, company policy and circumstances. Some are on first-in, first-out basis, while others are on last-in, first-out basis. A POS system can assist in all this.
Sales
This is the option most SMEs know and use. Usually, some businesses just update product description and price only to produce the invoice. What they just want is to see how much money was made in sales.
A POS system goes beyond that receipt or invoice; it can perform other functions as discussed above.
The sales module allows for invoices, cash sale slips and quotations for your customers. This is the route through which money enters the company. It must be designed in a way that promotes efficiency, as customers want to be served in the shortest possible time.
These modern-day systems can also allow you to set promotional prices, trade prices and wholesale prices for the same product. This will be activated by the quantities that you would have set in that system.
Customer management
With the same POS system, you can rank your customers based on their monthly sales contribution to the company. Those who have a credit facility can also be managed using the same system. You can create a debtor’s account, set their buying limit and come up with some debtors’ age analysis report that will tell you how long they have accumulated the debt.
Supplier management
Suppliers in any business are important stakeholders. This is where we get the products that we sell. Without products, there will be nothing to offer our customers and, as such, they must be managed properly.
A computerised system, be it a POS or enterprise resource planning, goes a long way towards easing tedious computations involved in the creditors’ ageing and how much should be paid and when.
The POS system can handle such issues easily and in no time, for there are some synchronisation that happens with the purchases module. As the goods-received voucher is captured, the creditor’s database is automatically updated, giving a realistic current balance.
Conclusion
Appropriate and informed use of the machines at your disposal can assist you in profitably driving your business forward. POS systems go beyond just producing receipts for customers. They can also assist you run the organisation better.
Dr Kudzanai Vere is the founder and CEO of Kudfort Zimbabwe, an accounting and business advisory firm.
