Summer 2005
Upgrade your POS

The latest retail software offers more ways to be productive—and productivity means profit. Among the innovations are better data-entry capabilities, sleek interfaces with alternative sales avenues, and customized reports.

“Many people think all POS software systems do basically the same thing,” says retail consultant Jeff Haefner. “This is a common misconception. Every POS system has different features, strengths, weaknesses and intended uses.” Advanced features include:

  • Tracking customer requests and providing follow-up ticklers.
  • Displaying customer sales histories.
  • Integrating sales and returns with an accounting and inventory program.
  • Searching for items by merchandise category or name as well as by SKU (stock-keeping unit).
  • Displaying item availability and shelf location.
  • Including gift certificate sales in daily reports.
  • Allowing user-defined codes for combinations of tender for single transactions—for example, when a customer wants to pay for one purchase partly with cash and the balance on a credit card.
  • Integrating daily reports and accounting programs with sales made via your web store or even through eBay.
  • Updating your accounting program with smart-card transactions (e.g., gift cards, frequent-buyer programs).

Those are just some of the dozens of things that newer POS systems can do, saving the business owner considerable time and money.

Time to upgrade?

So when is it time to upgrade? Maybe you need capabilities like those but your current software can’t provide them. Or maybe your hardware is starting to malfunction and tech support won’t respond fast enough, or can’t solve your problems at all. And what about transaction-processing speed? Maybe your system worked great when you were starting out but it’s sluggish now that the volume is higher.

“The decision comes down to this: What additional benefits are you going to get from a new system? And are those benefits worth the investment?” says Geoff Knapp, chairman of CAM Commerce Solutions, a California POS vendor. “A replacement decision is often forced when an older system is no longer reliable or supported.” But sometimes people put off replacing their POS system for surprising lengths of time. “While systems are often replaced after five to seven years, I know some retailers who have kept systems [for] 15 years,” says Knapp. Not a wise decision.

Experts suggest evaluating your current POS system every three to five years. Check on the alternatives that are available and ask yourself if upgrading will indeed help you serve customers better or save you time.

Make a list

“Choosing POS software is difficult because there are so many systems and features to consider. With so many options out there, it’s very difficult to determine what you really need,” says Haefner, who created a POS-software comparison chart in his book, The Retail POS Software Buyer’s Guide.

Make it easier by making two lists. On the first one, list the features you need but your current system doesn’t provide. On the second one, list the features you currently use and like and don’t want to lose. “It’s possible to lose important features in a new system,” says Knapp. “Maybe there are two or three reports that you live on. Maybe you run them every day of the week. [So] when you evaluate replacement systems, test them to see if you can either get those same reports or alternative [reports] that are even better.”

Knowing what you want is one thing. Deciding where to get it is another. There are thousands of POS vendors out there, and new ones pop up all the time. Many times a retailer will develop an in-house system, then package it and market it to everyone under the sun. No: you want a vendor who not only has sufficient expertise but will also be around to answer questions, solve problems and install upgrades.

“You need to thoroughly investigate any prospective vendor,” says Bob Crichlow, president of The General Store, a POS vendor in Florida. “Find out how long the company has been in business. Does it have experience applying its software to the special needs of stores similar to yours? And how many people are in tech support?”

Crichlow suggests visiting the company in person to get an assessment of its financial stability. Does it have a substantial office area that’s well maintained, or is it operating out of someone’s basement? If the latter, that vendor may disappear overnight, leaving you with an expensive, unsupported system.

Ask for references. Get at least three names of retailers who installed the same system you’re considering. Then interview them to see how well the system works, if it provides all the promised reports and services, and how the vendor responds to requests for service and upgrades. Also ask how often the vendor upgrades the software with new features. A more dynamic software developer will offer regular improvements, and many firms allow you to download upgrades at no charge.

Finally, Crichlow says, be sure to ask for demonstrations of proposed programs. His company offers two demos. The first is a stripped-down version that facilitates initial testing when a customer is reviewing alternatives. The second is a full version, which allows the customer to fully test before deciding whether to buy.

Test, test, test. Especially for the system’s ability to perform your most common and essential tasks. “Test how the proposed system handles layaways, transfers, adjustments and every other transaction that could have a piece of paper associated with it,” says Knapp. “Try to do them all on the system you’re considering.” And as you’re testing, chat as much as you can with the vendor’s personnel. This will help you determine their willingness to help. “When you purchase POS software, you’re buying a relationship, not just a product,” says Haefner. “You’ll be in continual contact with the vendor for software updates, support, training, hardware and consulting.”

Buy or lease?

Prices vary according to features provided. One established vendor, though, charges an annual fee of $2,500 for leasing a POS and accounting software system on two to five workstations. (For single users, the fees are $1,500 and $1,000.) Without the accounting module, the fee is $1,500.

This vendor also offers an annual service contract for $500-$700 for networked users, and $350-$500 for single users. The upper ends of the price ranges provide more hours of accessibility to tech support.

Equipment upgrades will add to the total, of course. You can attach a receipt printer, cash drawer and bar code scanner for an additional $600 or so. Add a personal computer to the above, and you’re talking an additional $1,000 to $2,000.

For retailers with more than one or two terminals, the costs can mount up, which is why many retailers lease their equipment. “Leasing is usually the best way to go,” says Haefner. “It’s a great way to spread out your cash, allowing you to buy higher-end software and equipment. And you have the option to deduct 100 percent of the lease payment as a business expense.” He also points out that leasing can help avoid the big cash crimp that can result when you buy equipment outright. By leasing, you can use the extra cash on hand to add a product line, for example, or buy more advertising.

If you decide to lease, says Haefner, make sure you understand the terms. “Some leases offer a one-dollar buyout at the end of the term. Others set up smaller payments but require you to pay a percentage of the balance at the end of the lease.”

Do it right

Whether you buy or lease, acquiring new equipment is a demanding task. But if you do it right, the creaks and wheezes you’ve been hearing from your existing system will turn into the sweet sounds of a happy, new and profitable POS.

Phillip M. Perry

Perry is a freelance writer based in New York, NY.
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