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How a POS system pays

Well, last month I stated I would show you some worksheets that would show you why you can’t be without a POS system. But also make sure you visit our Weekly Article Archive under Library and visit View Journals with Roy and read, "What is the most important benefit of a POS system?"

POS system pays for itself many times over. Real cash comes from accurate merchandise management such as, improved margins, increased sales, tracking inventory. Real losses are cut from operational improvements. You will see these tangible improvements within a few months of automating. Many retailers see the benefits of their system by adding 8-15% to their bottom line.

Improve margins by knowing when and what to order. You no longer will have to leave dollars piled up on the sales floor for inventory you didn’t need. You will improve your turns on merchandise by just in time ordering. You will know what’s selling and what’s not. Your POS system will prevent items from being rung up at any price or discounting to friends. Your POS system will deter the temptation to walk off with products or cash. These changes can make a huge difference in your bottom line. Let’s take a look at the battle of the One Percent. Suppose you decrease your average inventory by 1%. Increase your sales by 1% and decrease your expenses by 1%. Look what happens below to a store who’s sales are $500,000 per year.

 

Current

1% Improvement

3% Improvement

Sales

$500,000

$505,000

$515,000

%Gross Profit

45.00%

46.00%

48.00%

$Gross Profit

$225,000

$232,300

$247,200

$Avg Inv. Retail

$85,000

$84,150

$82,450

Expenses

$125,000

$123,750

$121,250

Net Profit

$100,000

$108,550

$125,950

Additional Income

 

$9,400

$28,500

Here another example of big cash improvements you can make if you can cut your inventory turns from 17.5 weeks to 10.5 weeks. Let say you sell $750,000 and your average inventory at retail is $250,000 a year. This means your turn your inventory completely in 17 ½ weeks. And to make this easy lets say your have a 50% margin. Just by improving you turnover by 7 weeks can add up to cash in the bank.

Sales

Turns

$Avg Inv Retail

$Avg Inv Cost

$750,000

3

$250,000

$125,000

$750,000

5

$150,000

$75,000

 

 

Increased Cash Flow

$50,000

So, with these kinds of numbers what are you waiting for? Many retailers have already given themselves real data on which to base decisions. Just think about the improved inventory turns, increased margins, no longer overstocking merchandise and know what’s selling or not. Give us a call, and see what a POS system can do for you.

Download the above spreadsheets for Excel

(Microsoft Excel is required for viewing)

 


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