Tracking your point-of-sale (POS) transactions is just like building a smart data system for your business. With each transaction recorded, your inventory updates automatically, sales volume and cash flow stay organised, and making decisions becomes much easier for business owners like you.
Whether you are new to the concept of POS transactions or are already using one, this blog will prove to be insightful for all. We will explain why you need to track your POS transactions, the steps that you can take to get started, common mistakes you need to avoid, and how to implement all that information to make helpful decisions for your business.
What is a POS transaction?
Every time a business sells its goods or services using a POS system, it’s called a POS transaction. Businesses across all industries use different types of POS systems to handle their sales.
Basic flow of a POS transaction
Let us understand the basic flow of a POS transaction with an example so you can visualise it better. Think about your neighbourhood grocery store with a counter in the middle where people queue up to pay for the products. The store is likely using a countertop point-of-sale (POS) system to process both cash and card transactions. And here’s what happens:
- When you place your products on the counter, the cashier scans each one using a barcode scanner, which is connected to the POS system.
- While your bill is getting finalised, you can see it displayed on a screen facing you. Called a customer-facing display, it is a part of the POS system.
- When it’s time to make a payment, you swipe your card on the card machine, which is part of the same system.
Finally, you get the receipt in your hands from a receipt printer. And a POS transaction gets completed.
Key components of POS tracking
Now that we’ve understood what happens at the point of sale during a transaction, let’s look at the key components involved in tracking the transactions. Tracking a transaction simply means keeping a proper record of it. You are tracking your POS transactions if you can do the following:
- Real-time sales monitoring: When a POS transaction is tracked, each sale gets updated instantly in the system. In a cloud-based POS system, where all the terminals are connected, the sales data is consolidated accordingly. All of this makes it easier to monitor sales across different locations.
- Track your generated revenue: You can monitor your income levels in real time by tracking your POS transactions.
- Efficient inventory management: With each sale, your business inventory gets updated automatically. This allows businesses to stay on top of product availability by checking it in real time and receiving reminders for low stock products, all while minimising manual entries and chances of human error.
- Consolidate payment terminal data: Tracking your POS transactions helps you get an integrated view of how sales are made, either by cash or card. This helps you analyse your current customer preferences and gives you future ideas to formulate strategies to draw in more customers. This payment terminal data feeds into the POS system to give a complete picture of your sales activity.
- View customer transaction history: By tracking customer purchases, POS systems allow you to analyse their buying behaviours and interests. With this information, you can devise specific marketing strategies and target your ideal buyers effectively.
Setting up a POS system to track your transactions
Step one to start tracking your POS transactions is setting up and using a point of sale system. Below are 4 practical steps that you can follow to successfully set up a POS system:
1. Choose a POS system that suits your business needs
Different businesses have different requirements when it comes to POS systems. Like in the example provided earlier, a grocery store is most likely to use a countertop POS system because it needs a fixed location where customers can queue for the billing process. On the other hand, a restaurant is more likely to use a portable POS system because the restaurant culture demands flexibility and convenience for customers.
Keeping that in mind, here are some important points to consider when choosing a POS system.
- Suitable for your business type: Consider the different types of POS terminals and see which one caters best to your business needs.
- Easy-to-use interface: Choose a POS system that makes it easy to manage transactions effectively for you. Terminal POS systems usually have more intuitive designs, like computers, which can help you learn the process in no time.
- Integration with accounting software: Ensure your POS system integrates smoothly with your current accounting software. This will allow you to manage your online transactions alongside your physical sales in one place.
2. Set up a reliable payment terminal
It is important that you choose a POS terminal that is not only compliant with your business requirements but also with the industry standards. It includes choosing compatible hardware and secure software for your POS system. Whether you’re buying a simple card reader or a comprehensive terminal POS system, it must meet the following points:
- Reliability: A reliable POS terminal means that it works without disruptions like freezing and disconnecting from the internet. To avoid such problems, choose a POS system from a trusted provider with maximum uptime and top-quality customer service so you can get quick support in case of an issue.
- Speed: It is about the total efficiency of the device, including its processing and response times. A POS device with a quick response time improves the checkout experience for both the cashier and the customer.
- Compatibility with contactless payments: Your POS system should be updated to meet the requirements for contactless payments of UK consumers.
- Security compliance: The most important aspect of a POS terminal is its security compliance. Security standards like PCI DSS (Payment Card Industry Data Security Standards) in the UK make sure that a device is secure enough to store and process sensitive cardholder data.
3. Customise your POS system
Almost all types of POS systems offer a range of personalisation features that you can use for your business. By using these customisation features, you can do the following:
- Set up product categories like groceries, tech products, books, and more, depending on what your business offers.
- Customise tax rates based on your location in the UK.
- Apply discount options and loyalty programs for your customers.
- Set role-based restrictions to limit access to certain POS features based on your employee roles.
4. Enable automatic online transaction processing
This feature syncs transaction data automatically and always offers up-to-date information. This means all the business activities, including sales, refunds, or transaction disputes, are all updated across the POS system and remain accessible via the internet.
According to Statista, the number of POS terminals in the UK reached 2.3 million in 2022.
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5 steps to track a POS transaction
You can track a POS transaction by following these 5 steps :
Step 1: Start the transaction process
A transaction initiates when the cashier scans the product code to enter its details, like price and quantity, into the system.
Step 2: Collect payment via the payment terminal
After a bill is generated, the next step is the payment collection part. Depending on the mode of payment via cash, credit card, debit card, or a mobile wallet, the payment terminal processes it accordingly. It then syncs the data with the POS system to record the price, quantity, and payment type of the products sold.
Step 3: Update inventory levels and revenue
After the funds are secured, the POS system updates the business inventory by reducing the product quantity of the sold items. If the product is running low on stock, it also sends a reminder to restock it on time. At the same time, revenue levels are also updated across the system, which shows the generated income from the sale.
Step 4: Generate a transaction receipt
Once the payment is successfully completed, the POS system generates a transaction receipt. Here is what it does:
- In case of a customer dispute, return, or exchange of a product, the receipt serves as evidence of the transaction for both the business and the buyer. A receipt number or code helps track the transaction in the system.
- It includes key details of the transaction like the items bought, quantity, total price, payment method, and time of transaction.
Step 5: Reconcile records
Reconciling a transaction means comparing the transaction details in your system with the actual funds transferred into your bank account. Regularly reconciling the records helps you catch any differences in statements. For example, if the POS says you made £550 in card sales but only £430 reached your account, you can investigate the problem and solve it on time.
4 Common POS tracking challenges and solutions
| Problem | What happens | Solution |
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Inventory mismatch |
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Cash statement errors |
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Terminal glitches |
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No real-time tracking |
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Even when using a reliable POS system, small issues can still arise from time to time. As a business owner, it is important to identify these problems promptly and have a basic understanding to take proper measures. That is why we have listed below the solutions to 4 common problems related to tracking POS transactions.
1. Mismatched inventory records
Inconsistent inventory records can trigger false alarms, like warning you about low stock when there’s enough, running out of a product sooner than expected, or overstocking items without need. Such errors usually happen when product quantities are updated manually or when sales data doesn’t sync properly with the system.
Fix? To keep the stock levels true to the sales volume, make sure there is an automated system to sync the inventory with the POS system regularly.
2. Inconsistent cash statements
Even a small discrepancy in cash statements can completely upset the sales records of a business. Especially with cash transactions, it gets harder to locate the root cause of the error since there is no digital proof of transfer of funds, like in card transactions. Errors like giving too much change, underpayments from customers, or forgetting to record a cash entry can throw off business totals, and it becomes difficult to determine whether the error was on the part of the business or the customer.
Fix? Make sure the cashiers follow proper cash handling policies to minimise the possibility of errors. Additionally, conducting regular end-of-day reconciliations is important to catch any mismatched transactions the same day.
3. Payment terminal glitches
Even if human error isn’t to blame, technical issues can also cause missed entries or duplicate charges. If your POS terminal freezes, glitches, or gets connection issues mid-transaction, it can cause problems with the data sync. As a result, some sales might not update in the POS system on time, which leads to inconsistencies.
Fix? A simple fix is to conduct routine hardware checks, regular maintenance of devices, and timely software updates for terminals.
4. Lack of real-time tracking
Without real-time tracking, managing the sales data efficiently can become almost impossible. If the updates are delayed, stock levels, sales data, and cash statements cannot be monitored properly, making it harder to solve any problems on time.
Fix? Set up a POS system with real-time POS tracking to make sure that every transaction reflects in sales, inventory, and accounting books immediately.
How to integrate POS transaction tracking with accounting software
You can seamlessly link your POS system with any accounting software you use. Here are some steps you should follow to achieve that.
- Make sure the POS system you select is compatible with the accounting platform your business already uses.
- With an integrated POS system, daily sales data is directly synchronised with your accounting software. This feature allows you to accurately reconcile your books by comparing the book entries with actual sales information.
- Set up matching accounts for sales, cost of goods, and tax accounts in the POS system as well as the accounting software. This way, entering transactions in the right category becomes easier, and each entry reflects correctly in your accounting records.
- Real-time tracking allows you to monitor your cash flow, inventory levels, and profit margins at all times. With an integrated POS system, you can also generate quick financial reports and gain deeper insights regarding business operations.
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FAQs
Review the sales summary, cash flow, and inventory reports daily. If you have integrated your POS system with your accounting software, you can also generate quick reports to gain a deeper understanding of your daily business operations. Additionally, don’t forget to reconcile sales data with your cash and bank statements at the end of the day.
The POS transaction takes place in the following steps:
- A customer selects an item, and the sale is entered in the POS system.
- The customer pays via cash or card at the payment terminal.
- After the payment is completed, the POS system updates the inventory and revenue in real time.
- Transaction details are updated in the POS system.
- A receipt is generated as evidence of the transaction.
To resolve a cash discrepancy, start by recounting the cash drawer and reviewing your daily transaction records. Daily reconciliation practices help businesses locate the problems on time, so there is a high chance of solving them successfully. If such issues persist, reinforce cash-handling procedures among your team to prevent future discrepancies.
