Why Computerize My Small Business? Part I – Understanding an Automated Business
Thursday, April 28th, 2011
The whole point of computerizing a business is to increase profits, save time, and increase efficiency. With a basic understanding of a what a computer can do, you will begin to see the many ways that computerizing can increase the profitability of your business. In the course of this series of articles, I will show you why a good computer system (hardware and software) should earn you at least a 300 percent return on investment annually.
A “Point-of-Sale” (POS) system refers to a computer with specialized software that can act as an electronic cash register, but also maintains and integrates inventory records, sales records, and other data. The beauty of a “Point-of-Sale” system is that all of the information is generated at the sales counter when you ring a sale.
Inventory Records
Computerizing your business means that all inventory updates happen instantly and automatically, and that inventory data can be freely accessed and used. When you sell an item, the on-hand count is reduced. If the customer returns that item, the on-hand count is increased. Using this information, along with past sales history, the computer provides a Reorder Report, which lists merchandise that needs to be reordered. You can then select the items you would like to order, and the computer will prepare a Purchase Order. When the order arrives, the quantities are entered into the computer, and the on-hand counts increase automatically. If any items are backordered, such items remain on order in the system.
Sales Records
A computerized business also means that sales records are immediately stored and organized, and available for evaluation. When you ring up a sale or service, the computer calculates the total cash receipts, credit card sales, sales tax and accounts receivable. At the end of the day, you have a complete list of all transactions and a summary of cash and credit information. The computer is also collecting profit, and commission information. Using this information, the computer provides sales, sales by department or category, profit, margin, markup, accounts receivable, payroll, and commission reports. It also generates account statements and invoices.
Customer Records
Customer records are also maintained in an automated business. The computer stores the transaction information and provides reports that list customer purchase history, merchandise rented, and account charges and payments. You can also print mailing labels and personalized letters. This makes it much less time consuming to send out service reminders, special sale announcements, invoices, account statements, and so on.
Conclusion
This is just a brief overview of what a computer/point-of-sale system is capable of. Such a combination can have a powerful impact on day-to-day business functions. A computer system can simultaneously accomplish tasks such as calculations, record-keeping, organization, and inventory control, in a matter of seconds, where manual record-keeping would require a step-by-step, time consuming approach with much more room for error.
Watch for the next three parts to this series, as I will go into more detail about the benefits of computerizing, including controlling your inventory, policing your profit margins, and more.
Craig Aberle is the President of Ebiz Corp, the publisher of http://www.barcode.com and http://www.pointofsale.com both online magazines dedicated to their respective industries. He was the founder and CEO of MicroBiz Corp from 1986 to 2000, a leading developer of software for small business.
Article Source:
http://EzineArticles.com/?expert=Craig_Aberle
Follow this link: Why Computerize My Small Business? Part I – Understanding an Automated Business
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