Whether you're selling gardening supplies, trendy clothes, or high-end electronics, your retail store's success is largely connected to your cash management procedures. Many small business owners treat their sales and cash flow with little regard for process. Instead, they approach it haphazardly without considering the benefits of integrating sophisticated point of sale (POS) systems and procedures related to petty cash and drawer balancing.
In this article, we'll take a closer look at efficient cash management procedures for small retailers. I'll explain how the traditional cash register can impact your ability to compete. I'll also provide an overview of a robust POS system and describe its value to improved inventory control.
Will A Traditional Register Suffice?
The answer depends upon your needs and budget. For example, if you have a small shop that processes a minimal number of sales throughout the day, a simple register may be enough. But, there are a number of limitations to keep in mind.
First, a traditional register will probably be incapable of tracking your store's inventory. Second, it won't allow your vendors to manage your inventory status in order to replenish products as needed. Third, a register will not offer the level of reporting that a point of sale system provides.
Each of these factors plays a key role in improving the efficiency of your retail business. For example, allowing your vendors to monitor your inventory levels in real time through a POS system reduces - even eliminates - product shortages. Vendors can keep your shelves filled which removes your need to store excess inventory. With fewer resources tied up in inventory, you can better allocate funds to take advantage of other opportunities.
Your Point Of Sale System
Most POS systems include the same basic components. There's a computer which manages the entire system. There's also a cash drawer in which you'll keep the money and receipts from credit card transactions. You can also invest in a pole display, though it's optional. Other pieces of the system include a monitor, keyboard, scanner, credit card terminal (again, optional), and a printer for the receipts.
You can also invest in POS software that offers varying levels of functionality. For example, basic packages can easily handle sales taxes, pricing flexibility, and printing product descriptions. Software that is more robust can process coupons, track inventory, connect to vendors, and provide detailed accounting reports.
The prices for POS systems start at several hundreds of dollars and can climb to several thousands. However, even as their functionality increases, their prices continue to decline. Plus, they add enormous value and flexibility to the small retailer's inventory control procedures. That leads to quicker inventory turnover, fewer product shortages, and more efficient cash flow management.
Coping With Increased Competition
One of the major concerns that specialty retailers have is how they can compete when the big-box merchandisers penetrate their market. Indeed, the presence of chain stores and discounters can siphon sales away from small shop owners. There are, of course, viable solutions. The important thing to realize is that small retailers have a number of advantages over giant chains. For example, they can move more quickly, provide better service, and enjoy high margins on products that are produced in lower quantities.
While installing a POS system won't resolve all of the challenges inherent with battling the large discounters, it will improve your ability to compete with them. Don't underestimate the value of maintaining strict cash management procedures combined with a robust point of sale system. As the megastores struggle under broad inventories and slim margins, you can leverage your size through better inventory control.
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