What is a PBX? How does a PBX phone system work?
Whether for internal calls between colleagues or external calls with clients and customers, clear communication is vital for business success. A phone system will connect your business with the outside world. But the best phone technology will help you work more productively, make more calls, and save money.
With a private branch exchange (PBX) phone system, you can manage internal communications, improve customer conversations, and cut your costs at the same time.
Here we explain everything you need to know about PBX phones, what they could do for your small business, as well as profile some of the top providers and phones available.
What is a PBX phone system?
PBX stands for Private Branch Exchange. This just means your phone server – the system used to switch between calls.
What is a PBX server?
A PBX server is what the phones in an IP PBX are connected to and what allows the phone system to work.
A private branch exchange (PBX) phone system helps you to streamline internal and external communications in your business.
There are three types:
- Hosted PBX – this is where a provider hosts the PBX at their location, offering you access via the cloud
- IP-PBX – this is hosted at your premises, meaning higher set up costs, but it can be cheaper overall
- Mobile PBX – this is a hosted cloud based PBX which interacts with your mobile phone
PBX phone systems are ideal for small businesses because they let you call your colleagues for free, add more phones without drilling new phone lines, and tap into features like transfers, voicemail and call recording.
This is a business-grade phone system that connects all the phones in an organisation, whether in the same office or across multiple locations.
PBX phone systems are designed to handle the large volume of phone lines, calls, and numbers that flow in and out of your business.
They include features that make them uniquely situated to the daily operations of a business.
How do PBX phones work?
A PBX lets callers communicate internally (within your small business) or externally (with the outside world). That’s because it links up your office phones with the public telephone network, VoIP (Voice over Internet Protocol) companies and SIP (Session Initiation Protocol) Trunks.
If this is starting to sound complicated, this diagram breaks down how it’s all connected in an IP (internet-based) PBX system:
In the pre-internet days, phones were analog, meaning they ran on physical wires. But today’s PBX telephone systems are digital. That way, a computer manages the calls, auto-connecting lines based on dialed numbers.
Generally, your PBX system will be hooked up to internal telephone lines connecting all your office phones, plus outside lines that lead all the way to your PBX provider. Usually, you just dial 9 to reach a number outside your network.
When selecting a PBX phone system, users have three options:
- Traditional PBX
- IP PBX
- Mobile PBX
Traditional PBX systems have their own phones, so users are bound to a particular provider. Switching your PBX supplier might mean replacing all your phones – and big costs. You’re also often tied to a limited number of outside phone lines and internal handsets.
But with an IP PBX system, phone calls run over the internet, and give you much more flexibility.
A Mobile PBX interacts with your Mobile phone allowing you to use the mobiles GSM cellular network to communicate instead of VoIP. This will give you the greatest flexibility of all systems, as your mobile is always with you and it can be used regardless of whether you have a VoIP connection or not.
What are the main features of PBX?
The best PBX systems come with a range of features – such as virtual receptionists, call transfer, and conference calling – that can give your business a professional image, regardless of its size.
They can also give you greater control over communications, cost less to operate than a traditional phone system, and help make your business look credible to potential customers.
The below is not an exhaustive list, but covers the main features you can expect to find with a PBX phone system:
- A virtual receptionist – also called an auto attendant, these are the pre-recorded voices that can greet the caller and provide them with a number of options. This removes the need to pay for a real receptionist, allows for efficient call routing, can greet customers out of business hours, and is entirely customisable
- Call transfer – transfers a call in progress to another destination, such as the next available person or a specific/relevant department
- Automatic call forwarding – automatically directs calls to another destination when there is no answer
- A dial-by-extension directory – allows you to create a customisable menu of departments, options, or people with a corresponding number, so the caller can be directed to the most relevant place
- Call recording – can be very important for quality control training. PBX allows you to record multiple phone lines at once
- Call logs – help your agents be more productive. They can see a full list of missed, inbound and outbound calls, including caller ID, time and date. Agents just need to click to call back
- Hold music – can enhance the waiting caller’s experience, differentiate you from other businesses, and build brand awareness and loyalty
- Call waiting – allows you to suspend one call while in progress and accept another call. You can then switch between calls depending on which needs to be prioritised
- Conference calling – allows you to have important meetings between internal and external people over the phone. People can join in and drop out when necessary
- Call screening – evaluates the characteristics of a call before you answer by checking caller ID. This enables you to block nuisance calls, and screen other calls without causing offence
- Voicemail to email – saves voicemails left at your company phone number as easily retrievable MP3 files, notifying you automatically
Types of PBX phone systems
In this section we take a closer look at the three different types of PBX phone systems.
You might see VoIP PBX called just IP PBX. It’s the same thing – the “IP” stands for “Internet Protocol”, and just means a set-up where phone calls work through your internet connection.
Who is VoIP PBX best for?
Due to its affordability and flexibility, a VoIP PBX is ideal for small businesses with minimal phone system requirements and those that are looking for a cost-effective communications solution.
What are the advantages?
The main benefits are the reduced costs and added flexibility. You cut costs because you can use a single network for all your calls and data – your phones just connect to the same server as your computers. And it’s more flexible, since you can easily link up more phones or switch suppliers.
Virtual PBX phone systems are sometimes called a hosted PBX. As you would expect, this means rather than you as the business owner setting up your own exchange, you simply give that responsibility to another company.
Who is a virtual PBX best for?
This option is perfect for small businesses with no in-house tech support, and it makes it easy to add as many phone lines as you need.
What are the advantages?
As a virtual PBX is hosted by another company, this allows you to focus on running your own business. Plus, should you need to increase your startup’s phone calling capacity, you can easily install additional phone lines.
Cloud or hosted PBX
VoIP PBX phones are hosted in the cloud (servers in the internet like Apple’s iCloud). With hosted or cloud PBX systems, the provider is responsible for handling the IP-PBX and the technology necessary to make it work at its location.
The provider then charges your business a monthly fee, which usually comprises a minutes package and certain extra features.
Adding additional IP phones requires extra costs and additional programming time on your side, but:
- Phone systems can be moved easily
- Hosted PBX has a lower initial cost to set up
- There are no maintenance costs
Who is a cloud or hosted PBX best for?
With the ability to make and receive calls from different locations, a cloud or hosted PBX phone system is best for remote companies or those that conduct business on-the-go.
What are the advantages?
The main benefit of a cloud or hosted PBX system is that you can save a fortune on hardware and repairs throughout the years.
You also have the freedom of hooking your desk phone number up to your computer and mobile, so you can take calls from wherever works best for you.
Hosted Mobile PBX
This offers you the best of all worlds. All the features, functions and flexibility of a Hosted Cloud based PBX plus all the benefits of using a mobile phone over the mobile cellular network.
What are the advantages?
You can add as many mobile phones and phone numbers as required, taking seconds to turn users on or off. No equipment needs to be installed, and users can be located anywhere in the world.
Why use a PBX phone system?
A PBX system offers many advantages that can help small businesses deliver a great level of service to customers and keep conversation flowing around the organisation.
If you’re still relying on a single copper telephone line, then it’s high time you considered upgrading.
- Cost effective – both types of PBX are more cost-effective options for small businesses, without the need for expensive hardware and maintenance
- Feature-rich – PBX systems offer a range of features that help you to manage the large volume of calls a modern organisation can expect (explored below)
- Professionalism – no matter what the size of your business is, a PBX phone system gives your customers the impression that you’re a large, credible organisation. This encourages those who may have reservations about dealing with a smaller operation
- It’s scalable – hosted PBX systems in particular offer flexible plans, and the ability to add more extensions and features at will
Who is a PBX suitable for?
Although a PBX can offer varying types and sizes of businesses a range of benefits, the following business scenarios are likely to find a PBX suitable.
- International calls – as a PBX can be hosted using the internet, this means that many packages and rates for calling internationally can offer significant savings compared to the cost of overseas calls using a traditional phone system
- Scalable systems – as phone lines can be added or removed easily and quickly thanks to their virtual nature, PBX offers an ideal solution for seasonal businesses or other types of startups that experience demands at certain times of year
- Limited tech resources – if your business doesn’t have in-house tech support, hosted PBX systems often come with installation and tech assistance
It’s also suitable for businesses that need to make a high volume of calls, such as call centres and other telemarketing companies.
Top things to know before selecting your PBX providers
With so many different providers out there, it can be difficult to know how to make a decision. Here, we profile some of the main aspects to consider when choosing a PBX provider.
- Features – while a particular provider may offer multiple features or have excellent online reviews, for example, be sure to examine what they offer and how well the features match your business’ needs
- Equipment – if you have existing phone systems equipment, consider if it can be connected to a provider’s PBX offering, or if you’ll require all-new kit
- Support – check what (if any) support is provided, as well as how and when it can be accessed
- Contract – be sure to review the terms and conditions of the provider’s service contract, including what is and isn’t included in the monthly price
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