PoS systems are quickly becoming merchants’ central financial operating systems. Here’s how you can make the most of the shift.
What does it take to win in point-of-sale today?
The systems are must-haves for millions of businesses in the retail, hospitality, and services sectors. Analyst estimates put the global PoS market at over $10 billion. Broader assessments include revenue streams from adjacent software surrounding the core PoS business value of the market.
While the market is large, it’s also crowded and competitive. Margins can be thin, especially where payment processing represents a core revenue stream. The PoS systems that are winning are doing so by expanding to provide more features and services. Payment services are “becoming a way to sell software.”
3 features PoS systems are using to raise revenue
PoS systems are uniquely placed to add value across a merchant’s business. However, they can only get there by integrating with other systems and software. Below are three ways PoS systems build integrated products that increase revenue per merchant.
1. Accounting automation: a $3 billion opportunity 💸
Many merchants spend hours every week copying data from their PoS system into an accounting platform like QuickBooks, Xero, or Oracle NetSuite. Accounting automation software removes this manual process, saving time and ensuring more reliable bookkeeping by eliminating the potential for human error.
Merchants often pay for additional third-party software that handles the complex accounting logic of getting their sales data into accounting. These services cost around $20-$50 per month per location.
Many merchants would prefer to access accounting automation features directly from their PoS. The leading PoS providers increasingly provide native integrations to popular accounting platforms that do just this.
PoS systems that provide this service offer their merchants a better experience as they no longer have to pay separate fees to a third-party provider. They also monetize this feature on their terms.
Accounting automation for PoS systems is about more than just bookkeeping for sales and payments. Another reason it makes sense for PoS systems to build their own accounting automation feature into their platform is that they can add more value the more features they add to their core product. For example, many PoS platforms are adding features for processes like ordering inventory, paying suppliers, scheduling staff, and running payroll. All of these involve financial processes that eventually get recorded in accounting software. Comprehensive sync with accounting platforms enables these features to be built faster and to a higher standard.
2. Embedded finance: the future of SMB lending 🔮
Square, a leading POS system, is now one of the biggest SMB lenders in the United States. This is striking given that the product, Square Capital, only launched in 2014. However, Square’s rise as a lender and the success of other PoS systems providing similar forms of capital makes sense in the wider context of SMB finance.
Merchants and other small businesses increasingly reject the bureaucratic processes of traditional banks. Instead, they are becoming used to new ways of accessing both working and growth capital. Revenue-based lending makes up a lot of these new loans. Rather than relying on outdated credit reports, a revenue-based loan can be made against the state of a business’s sales, usually with near real-time data. PoS systems are uniquely placed to provide these sorts of loans as they process exactly this data at the source and in fine detail.
Increasingly, PoS systems are building integrations to other platforms to pull in more data to make even more accurate finance offers. Integrations with commerce and payments platforms (eCommerce, for example) can provide a view of other revenue streams. Accounting integrations can be used to identify hidden asset risks and other outstanding loans or payments to gain a more holistic understanding of a merchant’s operations.
3. Business analytics: become merchants’ single source of truth ☝️
With a rich first-party dataset across sales, payments processing, ordering, inventory, customer communications, and staffing, PoS systems can provide merchants with handy ways to understand their business better. Cash flow forecasting, for example, can be extremely useful in identifying optimal times to pay suppliers and when and how to seek working capital solutions.
By nature, analytics and dashboard features like these work better with access to data from other sources too. By pulling in information from all the systems used to run operations, PoS systems can become the definitive source of truth for a merchant.
Insights provided to merchants from business analytics tools can also be used to optimize further how a PoS system raises revenue. Opportunities to sell additional products can be identified automatically and promoted to merchants at the ideal moment. Embedded financial services can increasingly be put on autopilot as merchants trust their PoS systems to optimize cash flow where possible.
How to raise revenue and become merchants’ central operating system
Codat works with a wide range of PoS leaders like Zettle by PayPal and SumUp to innovative sector-specific software products that provide some PoS features. Tens of thousands of merchants have connected their PoS to accounting via Codat.
Our product for PoS accounting automation, Sync for Commerce, processes millions of transactions every day, neatly syncing them with bookkeeping software like QuickBooks and Xero. This product and the features that our clients have built with it save merchants hundreds of thousands of hours every year.
To learn more about our solutions, sign up for a free account—or get in touch with a Codat specialist by filling out the form below.