Define POS System for Inventory Management?


Inventory management is vital for the business in the retail industry. A business’s retail inventory must be handled with great efficiency in order to avoid inventory shortage that greatly affects the selling activities of the business. One of the ways a retail business follows in order to accurately control inventory is the integration of a POS system.

A POS system is a software system in which sale records are recorded as the transaction happens while updating the inventory records in real time. This system especially follows a perpetual inventory system allowing you to track usage, to monitor inventory valuation changes, and to check inventory levels of each item.

Pros and Cons of Using a POS System

You may have considered adapting a POS system for your retail business but some of the most accurate and most effective POS software systems might be too large of an investment particularly for a small business. To help you make a decision, here are the pros and cons of using a POS system:


  • The management of the retail business can effectively track sales.
  • The analysis of factors affecting inventory is managed with less difficulty, especially when used in tandem with effective inventory templates in Excel.
  • The financial reporting and accounting of inventory is simplified.
  • The POS system is much quicker than the traditional cash register system.
  • The issuing of detailed receipts is done with ease.


  • The price of availing a POS system is more expensive than the cash register system.
  • There is a risk of malware infection.
  • It requires a reliable Internet connection and service provider for maintenance.
  • Although it can work well with a sample inventory, the software is limited to recording of sales and updating inventory. This is quite unlike other software that shoulders different accounting procedures and business operations.

Key Features of a POS System

Whether your company is using a perpetual inventory system or a generic one based on online inventory templates, you need to look into the key features you need to consider when managing POS system:

  • Must be user-friendly. Similar to how printable inventory templates are easy to use, a POS system should be less difficult for a cashier to handle.
  • Promotes easy entry of sales information. Recording of sales can be either manual or automatic depending item being sold with the use of the pre-inputted item codes of the company’s inventory.
  • Aids in the tracking of price and sales. A POS system should help track pricing of inventory, especially for execution of pricing discounts and other formulas.
  • Allows you to update product information. Inventory information similar to what is written on the sample inventory templates in DOC format on this website should promote update of products with ease.
  • Provides safety and prevention of the cash receipts. The system must be safe to record cash receipts to avoid embezzlement and theft.
  • Calculates different types of tax rates. Different states follow different tax rates for products, making it essential to check if the POS system calculates tax following regulations of your state.

Decisions to pursue a POS system or not for your business depends upon the goals and the needs of your business.

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