Businesses have specific needs when it comes to inventory management. A decision that every retail business owner will have to make is whether a Point of Sale (PoS) or an accounting system should be the master for inventory in the business. There is no right or wrong answer to this question, but everyone should be aware of the advantages and disadvantages before deciding on an option.
Point of Sale systems typically provide data on real-time transactions, as well as inventory levels and customer data. These systems can also include tools such as barcode scanners and alerts for reordering. Holding inventory in a PoS system means stores can benefit from faster interaction with inventory. However, it might mean that financial reporting is more difficult, as the inventory data is not housed directly in the financial system where write-downs and inventory counts need to be managed.
Accounting systems are often the first choice for retail business owners. This is because it can feel more natural to have a single source of information that tracks both inventory and financial data. However, using an accounting system can mean your store won’t reap the potential benefits a PoS system can bring, such as more in-depth data.
Ultimately, the decision between PoS and accounting systems comes down to where you think your business will derive the most value: quick access to inventory data (PoS), or a single hybrid system (accounting).
The difference between inventory and stock can create additional confusion when trying to make a decision between Point of Sale and accounting systems, so it is important to understand what each term means.
Stock refers to finished goods that are available for sale in store. A diamond solitaire engagement ring in a display cabinet is part of a store’s stock. Inventory, on the other hand, includes stock but it also goes beyond what is in store ready to sell to include raw materials and components. Loose diamonds and semi-set mountings, for example, would be considered inventory.
On this basis, many businesses opt to use their PoS system as the master for their stock, and a separate accounting system as the master for inventory.
Best-in-class accounting systems will allow businesses to choose inventory management options like FIFO (First In, First Out), which many Point of Sale systems do not support. This kind of feature can help with ensuring your business does not end up with too much aged inventory, which can become difficult to manage over time.
A good PoS system should offer integrations with popular accounting systems like Quickbooks, Xero or Sage. Well-designed system integrations should allow you enough flexibility to use the most important features of each tool, and ultimately find the right balance for your business.