POS and ERP Software

Confusion or Misunderstanding or Both?

Probably both. With today’s technology you can now get systems that provide both Point of Sale (POS) and ERP functionality. A few years ago, this was not the case, and they were two distinct tools used for different purposes. However, this has been blurring recently with both POS and ERP providing similar working solutions.


POS software

According to Techopedia, “Point of Sale Wholesale Point of sale (POS) refers to the physical location at which goods or services are purchased and transaction data is taken in through electronic cash registers or other electronic devices such as magnetic card readers, optical and barcode scanners or some combination of these.”

POS does not refer to an order entry process, but to a physical location where customers purchase goods and services.  Presently, POS transactions occur in retail brick and mortar stores, plus restaurants, movie theatres, hair salons, mechanic shops etc.

A POS terminal is a physical electronic device used to capture payment cardholder data at the source of the transaction. They read the information from a customer’s credit or debit card and then process the payment.

It is important to differentiate POS software from other business management systems such as ERP.  Both offer similar features and are geared towards different markets. POS is best suited for Business-To-Consumer (B2C) companies that manage walk-in traffic from customers who visit their location. Specially, if they operate as a cash and carry, have a showroom for walk-in customers or operate retail brick and mortar locations. However, there are better software solutions available when your primary business does not include walk-in customers.

Enterprise Resource Planning Software

An all-in-one business management solution, ERP system is complete in itself with features for:

  • inventory management
  • order entry and processing
  • accounting
  • warehouse management
  • contact management
  • purchasing
  • sales and financials

Many ERP systems will provide optional components that are industry specific – for example, point of sale functionality and eCommerce tools. The goal of ERP software is to replace all existing software packages and manage company data from a single database – including sales from multiple channels such as retail, eCommerce, trades shows, wholesale and more. ERP with built-in POS functionality allows users to create orders and accept payment on the front end when dealing face-to-face with customers through POS terminals. It also helps order creation and payment processing on the back-end without the need for traditional POS equipment. This allows employees to enter an order directly into the ERP system and process the payment on account, through an invoice or via credit card.

ERP solutions offer eCommerce: which provide customers the option to place orders and submit payments online and through mobile devices but are distinctly different from POS software. When speaking with vendors it is important to understand the different terminology to ensure you’re referring to the same functionality and system requirements. For example, businesses looking for software to manage orders, may decide to look at POS software, but as we discussed above this is not always the best decision.  By all means, one should focus on finding a software vendor that caters to your specific industry as opposed to starting the search based on functionality requirements. A knowledgeable vendor is able to provide insight into what specific features are required, and will get you thinking about how to manage all aspects of your business.

How successful is a combination of ERP and POS?

Five benefits of integrating the two:

  1. Easy Access to Crucial Information:
    • Provides immediate access to real-time information including customer purchase history that helps staff make better recommendations. This improves cross-sells and up sells
  2. Possibilities:
    • Omni-channel sales –  can fulfill demand from various touch-points ditching delays, reducing returns and increasing sales, all at the same time
  3. Maintenance of ledger balance:
    • Integrated systems help you identify ledger balances and determine the cash flow for your business with ease
  4. Reduction in risk:
    • Ensure the data entered into both systems is accurate, thus dropping the chances of data mismatch. The integration ensures real-time upload and download of data giving you information from a single pane of glass
  5. Better Demand Supply management:
    • Offering a holistic view of business – helps you determine the sales, inventory, and revenues. This in a way helps to accurately plan and maintain adequate stock level shunning situations of over-stock as well as under-stock

Each system has its own advantages, using a combination of the two can take your business to the next level! We recommend you go for a solution that could serve your purpose specific to your business model only.


Have different thoughts and opinions?  Let us know here ⇓


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