EPOS and its importance as Management Information System

Sham Lal J. C
MBA (III Semester)
Institute of Management in Kerala

EPOS System?

EPOS is an acronym for electronic point of sale system. Generally used in retail operations to itemize & summarize sales.  

An EPOS (Electronic Point Of Sale) system is used for the accurate taking and recording of payment for goods and services in a shop, restaurant, hotel, or any other business that serves customers.

An EPOS system saves a retailer having to price all goods on the items themselves.   It keeps a record of stocks and can be used to ensure accurate re-orders.  EPOS generates management reports giving sales mix, margins, top sellers and can be used to check for theft either from staff or through shoplifting.   It can also link to a wide range of other systems in your business making the day-to-day running of the store a lot simpler.

EPOS will increase your bottom line by enabling you to have better control of the stock and your profit margins.   The process of scanning the product through the system cuts out the massive loss suffered by retailers though inaccurate till operation.

EPOS (Electronic Point Of Sale) which is really a computerized till point.

Either standalone for a small shop or networked into a LAN (local area network) for larger shops.

The HQ can also receive all the data over a WAN.

All merchandise is bar-coded. At the till point the sale is conducted by entering the product codes (or scanning the barcode if applicable); the computer looks up the price, prints an "itemised" till receipt, totals the sale, and provides till control over the daily cash and other tendering types that are accumulated.

At the end of the day the stock is deducted by the quantities of merchandise sold.

Re-order recommendations are produced where the new stock level has dropped below a pre-set minimum threshold.

The daily sales can be reported on, for takings, profitability, discounting anomalies etc.

The aggregated sales are accumulated for periodic analysis, so that items that are selling can be sold to a maximum, and conversely the "slow movers" can be weeded out.

The periodic analysis also provides useful feedback as to where the organisation's profits are coming from; where the company is over-stocked in relation to current demand; and so on.  

EPOS also offers solutions in the area of Internet Payment and transactions. Payment options include credit card payments as well as accepting checks. They utilize an ASP model to process these transactions on your behalf. They can also set it up so that the fees charged for processing the transaction are charged to the user or absorbed by you as a cost of doing business.  

EPOS functions

EPOS reads the barcodes on products and makes the appropriate charge.  

Every time you sell something, it adjusts your stock and can be used to raise orders to replace actual sold stock.   This helps reduce out of stocks and stock holding at the same time.

 Reduced stock holding helps the cash flow in your business. 

Once you have told your system what the cost and selling prices are, it can work out your profit margin and it can also control your VAT and your ledgers.

What are the benefits of EPOS?

POS Software Benefits

Depending on your business needs and the POS software, you can hope to gain several benefits from utilizing POS software in your environment.   Some of the benefits may include are:

  • Increasing profit margins
  • Automation of POS processes
  • Easier management of POS processes
  • Improved efficiency and productivity
  • Improved customer service

These are just several benefits that you may achieve by implementing POS software for your business.   Since there are several POS software packages available, it is always a good ideal to make sure you've determined your POS requirements and implement a trial version before you choose your POS software solution.

    * Handles payments quickly,
    * Updates inventory lists and
    * Provides instant stock information.
    * Instant real time information on stock levels
    * Demand prediction
    * Instant accounting
    * It supports knowledge management to enable the right product lines to be stocked at the right time in the right place
    * Supports electronic fund transfers
    Link EPOS to a central database system and online shop to ensure that your website shows accurate stock levels
    * increased sales turnover,
    * lower stock levels
    * Reduction in Theft and Shrinkage
    * Saving of Annual Stock Valuation Fee
    * Reduction of Branch Spending Direct With Suppliers
    * Increased Value of OTC Sales

    To increase the value of OTC sales, we must ensure that top selling lines and sales trends are identified, and that these products are available on the shelves, in the right place, for the customer to purchase.

    Using manual controls this is very difficult to achieve, but using the specifically developed EPOS

Sales Analysis Report

    * Provides sales analysis by quantity, value or profit, covering the top or bottom of a selected range of products.
    * Using the sales analysis options we can easily identify the products which contribute most to turnover, the system will even rank them in order. Using these facilities we can therefore identify the products which:-
    * Must always be in stock
    * Should be given volume display facings
    * Must be located in eye level, easy to access, shelf areas.
    * Automatic Purchase Order Generation

Based on the sales history information held within the system, accurate purchase orders will be generated. This will ensure that sufficient stocks are reordered to satisfy projected demand, preventing any lost sales.

    * Lower Investment in OTC Stocks

Stock levels of products which sell well will be kept under control by using the sales analysis and automatic order generation procedures. However products which are not selling, or where existing stocks are too high upon installation of the EPOS system, need to be identified so that action can be taken.

By utilising the following procedures, optimum levels of OTC stocks will be identified and maintained.

    * Excess Stock Report

Within a few weeks of installing the EPOS system, this report will utilized the sales history available to identify products where there are excess stocks to satisfy customer demand.

    * Slow Sellers Analysis

By identifying products which have not sold since a selected date, we can evaluate the pricing, shelf position and relation to different manufacturers products within the same department, and take the necessary action to promote the sale of these products.

    * Automatic Purchase Order Generation

In addition to ensuring that fast selling products are automatically reordered, the EPOS system will also ensure that slow selling items, or items with excess stock, are not unnecessarily ordered.

    * Increased Gross Margin

Setting and maintaining optimum profit margins for each product, accurate pricing and regular price updating, and of course price and cash control at the till, all contribute to an increased gross margin.

All of these procedures are controlled within the EPOS system, using the following facilities.

    * Product Price Report

Each product holds a current selling price, promotional offers (if applicable), and the latest cost price. A required Profit on Return   (POR) can be pre-determined for each product group, and the system will always recommend a new retail price which will maintain this POR after any cost price change. Where individual price ticketing is still used, the system will produce new retail price tickets for all products, or shelf edge labels if appropriate.

    * Weekly Price Updates From EPOS

The weekly update disc that EPOS distributes to all of its users, includes all Price updates, ready for update to your live product file, when any required re ticketing has been completed. All price changes for RPM based products are identified separately.

    * Profit Audit Report

Regular monitoring of the contribution to gross profit from each product can be achieved easily with this routine. This will highlight lost profit, which otherwise may have gone undetected. (Alternately the routine can be used to identify excessive selling prices which are likely to stop sales.)

    * Price and Cash Control at the Till

Because the current selling price for each product is held within the system, then each time the product is sold it will be sold at the correct price. This removes the possibility of under-ringing at the till (either intentionally or accidentally).

    * Reduction in Theft and Shrinkage

 One of the major problem areas for all retail outlets is that of theft, in some form or other. Using a manual system, without a detailed audit trail of product sales, (by assistant, date, time and till number), and regular stock verification, theft is very difficult to identify at an early stage.

Merely by implementing a EPOS system, and advising staff of the types of controls and information available to management, it should reduce the temptation of theft. What it will also do is impose controls which will identify stock shortages by individual product at an early stage, enabling management to take appropriate actions. This is achieved via the following routines.

    * Immediate and Accurate Stock Recording and Update

    All aspects of the EPOS system which affect stock levels do so immediately. This means that the stock level recorded by the system should always be equal to the actual stock level, making it simple to balance and verify.

    * Printing of Stock Count Verification Sheets

    By printing out stock verification sheets, on a rotating departmental or group basis, the system will ensure that all stock is counted on a regular basis.

    * Stock Count Posting

    The system will verify the actual stock level counted against the system held stock level and report any discrepancies, by quantity and value.

    * Detailed Till Audit Trail / Enquiry

The EPOS system maintains a detailed audit trail of every transaction, which can be printed or displayed at any time. The system will even allow you to display the latest sale completed, on the back office control computer, so you can verify that an expensive item taken from the shelf has actually been processed as a sale.

    * Saving of Annual Stock Valuation Fee

Not only does an annual stock take by an external organisation cost money and disrupt normal trading, many pharmacy managers remark on the potential inaccuracy of the valuation.

    The EPOS system will provide an immediate and accurate Year End stock valuation, or indeed a stock valuation at any time, by using the following routine:-

    * Stock Valuation Report

    By ensuring that the system stock levels are accurately maintained, then the Stock Valuation Report produced by the system can be relied upon for accounting purposes, thus removing the necessity for an annual stock take/valuation carried out by external contractors.

In addition, because the system maintains the Retail Price, Latest Cost and Average Cost for each product, the stock valuation can be produced based on any of these costs.

    * Reduction of Branch Spending Direct With Suppliers

For a multiple branch pharmacy group, the problems of controlling stock levels and supplier reordering are multiplied. Each pharmacy manager has to be relied upon to maintain optimum stock levels and not to over order with suppliers.

The EPOS system provides automated facilities for central stock ordering for all branches, ensuring that the best discounts are available from suppliers for 'pack' purchases. Each branch can effectively transmit its order requirement to the 'Head Office' and this order requirement can be collated.  

If the Head Office also has warehouse facilities so that branch requirements can be satisfied from internal warehouse stocks, then an appropriate picking list can be produced for each branch's requirement.

Where branches are local to the Head Office, and there is a regular delivery facility to the branches, then each branch's stock levels can be kept to an absolute minimum, with the Head Office effectively providing a 'shelf fill up facility' for each branch.


    * Use EPOS software to provide sales information

      o This can help you focus on more profitable lines,
      o Improve your demand forecasting and
      o Minimise inventory.

    * Add software modules to improve efficiency

      o  Adding Electronic Funds Transfer (EFT) capability to your system means that every time a sales transaction is recorded,
      o The credit or debit card transaction is also processed,
      o  Reducing the time spent per transaction.

    * Link your EPOS terminal to other systems

      o By connecting EPOS to back-office systems such as your accounting package, you can increase control over your business and improve profitability. Many EPOS packages will export data to popular accounts packages such as Sage.

    * Link your EPOS system to your website

      o This provides online customers with rapid, up-to-date stock information. If stock runs out, EPOS can update the site to show that it is unavailable and warn potential customers that there will be a delay in delivery or offer an alternative.


    * Integrate EPOS with your stock control system

      o This allows you to keep stock information up-to-date in real-time and streamline your supply chain processes. Your EPOS system can automatically determine which products are fast-moving and when they need replenishing.

    * Link your stock-enabled EPOS terminal to your suppliers' web sites, extranets

      o This provides them with access to real-time stock information, allowing them to manage their own purchasing more efficiently.

    * Gather information on the movement of your stock

      o From the point of purchase, information on how stock is moving can be fed through to the warehouse and purchasing department, enabling you to move towards automated purchasing and restocking.

    * Provide suppliers with tracking sales and purchasing data

       Giving suppliers information on your customer purchasing habits and your marketing helps them factor your order demands into their plans.

    * Integrate data from EPOS with data from handheld scanners

      o  This means you can track bar-coded products on the journey from your suppliers to the warehouse to the store to the final point of sale. You can then identify where goods are being held up, compare the performance of different suppliers and their delivery times - and improve on the results.

    * Source-marking

      o  Partners in fast-moving supply chains should consider source-marking (i.e. article numbering and bar-coding) according to international standards. This will allow them to track and analyse all their goods at any point in the supply chain process.

Need of an EPOS system

To some extent it depends on turnover, but most convenience businesses will benefit from EPOS.  

Does your business require the ability to customize a Point of Sales (POS) system to improve business and transaction efficiency? Need the ability to improve control of inventory, customer information and point of sales detail?   Utilizing POS software may be the solution you've been looking for.

You will find POS software in just about any type of

    * restaurants,
    * grocery stores,
    * shopping centers, and
    * Other types of business. Businesses wanting to automate their point of sale operations need the ability to manage day to day operations in a simple and affordable manner.   With POS software it can control all aspects of sales thereby saving time and increase accuracy.

What Is POS Software?


    * Total Control

Total Control is a comprehensive back office system that gives the tools to manage the data provided by retail and hospitality Epos systems.

It provides powerful reporting, product and price file maintenance, style, size, colour capabilities and Epos system configuration facilities giving the user total control of the business.

    * CRM based   Software
    This database driven customer relationship management system has been developed for retail, hospitality, leisure and similar applications where there is a need to capture information about customers and their spending habits.

The system enables the smaller operator to compete on equal terms with the majors and attract business from them. Low cost magnetic cards are used to capture information on the customer when the card is swiped through the terminal.

POS Software utilizes individual components such as

    * Touch screen display,
    * Barcode scanners,
    * Computer cash registers and
    * Cash drawer systems to operate as a point of sales operations as well as an inventory control system.


      * Daily sales transactions,
      * Track customers,
      * Provide an integrated web storefront as well as
      * Provide a real-time balance sheet and profit & loss statement at days end.

Choosing the right EPOS system

EPOS particularly benefits organisations with a large throughput of goods to a large customer base. The larger the organisation the more sophisticated the EPOS solution should be , but it may not be necessary for smaller organisations to invest in complex solutions.

    * Software packages linking EPOS to your accounting system

    Need to buy additional modules for extras like Electronic Funds Transfer (EFT), label printing or remote access. This approach can be cheaper and more flexible than buying an off-the-shelf system, but you may need advice on setting it up.

    * Outsource EPOS to a third party specialist

    This is only just becoming available in the UK. An Application Service Provider (ASP) will 'rent' you specialised software and provide a secure, internet-based link to your system along with consultancy and management. The ASP can host and integrate your EDI system and deal with any technical problems. You will need a broadband connection.

    * Customised EPOS solutions

    Consultants and software specialists can customise / design an EPOS solution and integrate it with existing hardware / software and your web site. This is likely to be cost-effective for companies with a large retail or hospitality outlet,


Cash registers are great for most businesses, but when you've got thousands and thousands of items for sale, it's time for something a little more sophisticated.


    * Start of Day

      o The system will prompt for a new session is staring.
      o Sign on and Sessions on a day to day basis there can be multiple sessions on each till to allow the control of cash, or the operator.
      o Activity Tracking
      o All information is securely logged in electronic format and can be accessed directly or forwarded for audit purposes.

Sign On

    1. Product, Price and Discount Entry
       Product Entry:
       Product codes can be entered at the item prompt, via keyboard,
    2. Barcode scan,
    3. Preset key on keyboard, or touch screen.
    4. Pricing can be set on a retail or trade counter basis
    5. Finding Products
    The Product Find function allows products or categories to be searched by all or part of their descriptions, or part numbers. A separate enquiry can be made to check stock, and if using Line 100/MMS or similar accounts product with multi location facilities, checking of the warehouse, and other branches becomes possible.
    6. Item Corrections
    Items can be corrected, removed and edit during the transaction.
    7. Price Corrections
    A product can be sold for a different price than the recorded price file, subject to the till operator being authorised to do so.
    8. Multi Buys
    Automated Multibuys can be set up from the Pay point Luanch Pad( Central control software) ranging to buy one get one free, to complicated combination deals. Full details of the discounts being recorded on the till receipt.
    9. Discounts
    Item level, and transaction discounts by value or percentage can be offered subject to an authorisation sign on.
    10. Other Transactions
    Products can be exchanged or refunded subject to suitable authorisation
    11. Reprint Receipt
    The last transactions receipt can be reprinted if required.
    12. Layaways

This allows transaction to be stored temporarily and recalled for later completion. Control settings allow this to be limited to one cashier or multiple layaways can be allows with automated or manual numbering. For use with sales ledger or credit accounts, the system automatically allocates the sales ledger account number as the reference.

To retrieve previous layaways the reference can be entered directly or searched for by number or customer.

Launching other Applications

Pay point can be set to automatically launch or manually launch third party applications including internal macros. The till remains in static until the other application is completed.



On pressing the Total key, the bill total and balance due will be updated. This can be paid in a number of different preset tender types by selected from the keyboard, screen or menu. This including Cash, Cheque, Credit Account (if used in conjunction with an Accounts package e.g. Sage Line 50/100), Voucher etc. This can be in full or part payment. A sub total of each tender type made is printed on the customer receipt.


Pay point EPOS software EFT solution allow retailers to process payment electronically. This includes Debt, Credit and Cash Back payment transactions. It validates cards on-line and allows for the end of day reporting and reconciliation with your bank. At the end of day payments are polled to your nominated bank account . Commedia are accredited with all leading credit, and debit card acquirers.

End of Day

End Session

This closes the trading account on the current session, and allows cash declaration to be performed. Multiple sessions can be held on the system until consolidated using the end of day function. This end session generates a total report on:-

    o Floats and lifts
    o For each tender type
    o For each discount type
    o Exchange /refund type
    o Summary of discounts, exchanges, voids, and corrections
                 By cashier if required
    o Cash Declaration
    o Summary of VAT on sales
    o A time band report with a number of transaction, items and value of sales within each hour of the day.
    o A total sales figure

This is performed after the End session and the starting and the starting cash float is removed. After counting and declaring the money in the drawer the system will generate a variance report against expectation to screen and print. This declaration can be set to be blind if required.

This closed the trading on the till and prints a consolidation report on the day's session. The report summaries totals:-


EPOS is an acronym standing for (Electronic Point Of Sale) and the terminology used to describe a system of processing sales transactions electronically.

EPOS systems can be integrated into existing computer systems in a variety of different ways. In its simplest form an EPOS system consists of an electronic point of sale cash register linked to a computer that is used to process sales and maintain stock. More sophisticated EPOS implementations can link an EPOS cash register with barcode scanning into complex back end databases used to control stock levels in conjunction with suppliers distribution warehouses. EPOS can also be used to provide preferential customer loyalty rewards and link in with online e-commerce stores for stock level management.

Where businesses have a central distribution point, a large amount of stock, and multiple sales outlets EPOS really comes into its own. Without EPOS it is virtually impossible to manage stocking levels, and ensure each sales outlet receives the right amount of the right products. To manage such a scenario would be very labour intensive and prone to error, leading to inefficiency and unhappy customers.

With a good EPOS system, the central warehouse is always aware of the stock levels carries by each outlet. The EPOS system can monitor usage rates and trigger re-orders when there is a sudden surge in demand for a particular product range.

In short EPOS is an indispensable tool for the management and control of stock for retail outlets.

Sham Lal J. C
MBA (III Semester)
Institute of Management in Kerala

Source : E-mail August 31, 2005




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