What is a PBX Phone System and How Does It Work: All You Need to Know

Are you looking for a way to communicate effectively with your customers and connect your employees seamlessly? 

Or do you want to have a better phone system without the headache of installing bulky servers or additional hardware? Installing a PBX phone system is an excellent choice.

Since efficient communication is a key factor that drives the success of business, PBX( Private Branch Exchange allows businesses to manage and facilitate both internal and external communication with exciting call management features.

With the rapid pace of technology change, the PBX system has also changed drastically. From copper wire to cloud connectivity, PBX has upgraded to the next level, enabling seamless connectivity to the business. Additionally, businesses can increase productivity by 25% and reduce operating costs by 20% by using PBX systems. 

More than 60% of businesses in the US and Europe use a PBX phone system to communicate worldwide, so why not your business? So, read the blog till the end to know more about the PBX system, its working mechanism, VoIP (Voice over Internet Protocol) technology, and UCaaS (Unified Communications as a Service) platforms and uses. Let’s jump right in!

What is a PBX Phone System?

PBX, also known as Private Branch Exchange, is a telephone system that allows communication within a company or organization. This telecommunication system allows users to communicate with each other and with the outside world through telephone lines. This private telephone network operates an organization’s internal telephone network using different hardware components or even software.

Private Branch Exchange (PBX) provides a gateway to the public switched telephone network (PSTN), allowing seamless communication. Furthermore, PBX offers various features like Call forwarding, call routing, voicemail, auto attendant, call transfer, call waiting, Interactive Voice Response, and many other call management features. These features ultimately help businesses collaborate and communicate better and enhance productivity as well as efficiency.

Types of PBX Phone Systems

Today’s phone system is upgraded, flexible, and scalable due to technological advancements. From large and heavy server PBX to cloud-hosted PBX, the phone system has leaped. Furthermore, with technology like VOIP and UCaaS platforms, phone systems today are more advanced and more functional. So, let’s discuss the types of PBX phone systems:

Traditional PBX

Traditional PBX systems are old PBX systems that require on-site equipment or an analog PBX network to perform calls. Traditional PBX systems use analog technology, so they require copper phone lines, landline phones, and other equipment to operate. With analog PBX systems installed at your business, businesses can connect plain old telephone service (POTS) lines to the public switched telephone network (PSTN) and seamlessly communicate with employees and customers. 

In traditional PBX, you do not require any internet connection; businesses can make or receive incoming calls with on-premises PBX systems. Traditional PBX allows basic calling features like call forwarding, call routing, call tracking, and call waiting and delivers an excellent calling experience. Moreover, this PBX system is scalable, but you need additional infrastructure and copper wires.  N  Here are some pros and cons of using traditional PBX for business:

Pros 

• Customizable 
• No internet required
• Offers basic calling features 

Cons 

• High Upfront cost
• Requires physical hardware and server space
• Maintenance costs are high 
• Limited scalability

IP PBX

IP(Internet Protocol) PBX is a modern version of PBX that uses Internet Protocol for communication. With the internet revolution, telephones today are connected to the PSTN (public switched telephone network) via VoIP technology without requiring any additional copper wires or costly infrastructure. Since IP PBX uses the SIP(session initiation protocol) trunking process, this application layer can be used to operate a telephone service over the internet and connect phone systems. All you need to do is set up your SIP trunk with a provider and create a small physical space for data pockets for storing call data.

IP PBX uses a cloud platform, so it is flexible and scalable compared to traditional PBX so that you can connect with employees and customers from anywhere. Apart from flexibility, the cloud PBX system offers a wider range of features like unified communications, video calling, SMS, conferencing calls, call recording, and more at a very affordable rate and without any high infrastructure cost.

Pros

• Offers a variety of features compared to traditional PBX
• Customizable 
• No on site server requie
• Affordable and better support
• Fewer maintenance costs 
• No upfront costs 

Cons

• Broadband connection required
• Can not function without internet 
• Requires VoIP phone or software

🔔Also read: VoIP or Traditional Phone Systems: Which is Best for Your Call Center?

Hosted or cloud-based PBX

Cloud-based Hosted PBX is a cloud-based telephone system in which the PBX hardware and software are hosted by a third-party service provider over the cloud platform. Using hosted PBX business and communicating inside and outside the organization seamlessly over the internet eliminates the need for an on-site server or additional hardware with internet-enabled devices like smartphones, PCs, Laptops, and tablets.

Cloud PBXs are complete phone solutions with off-site equipment and IP technology used to make and receive calls over the Internet. Moreover, businesses should not worry about maintenance costs as the provider itself offers high levels of reliability and uptime. With hosted PBX, users can easily integrate with various software, minimize upfront costs, provide scalability options in just one click, and enable remote working support. Furthermore, Hosted PBX offers a range of advanced features like voicemail, call forwarding, auto-attendants, conferencing, and many more. 

As a result of these benefits, many businesses are shifting toward this platform for enhancing overall business communications and competing in the ever-changing technological environment. Here are some pros and cons of cloud-based PBX:

Pros

• Low setup cost 
• No maintenance 
• Advanced calling features 
• Hosted by third-party 
• Easily scalable 

Cons 

• Totally relies on internet connectivity
• Limited customization option 
• Security concerns 

How Does a PBX Phone System Work?

A private branch exchange (PBX) phone system is a telecommunications network used by organizations to facilitate internal and external communication. PBX works by operating as a private switchboard, connecting multiple internal phone lines and allowing users to make phone calls within the organization without requiring an external line.

Furthermore, the PBX system manages incoming and outgoing calls by routing them to the appropriate extension. Internally, when this phone system receives a call, it helps to guide calls, enabling features like call forwarding, transfer, routing voicemail, and conference calling. To connect calls to external numbers, it interfaces with the public switched telephone network (PSTN).  PBX system uses predefined rules, like IVR menus or time-based routing, to route calls. PBX flawlessly handles outbound calls by connecting them through available phone lines or service providers.

Modern PBX systems utilize Voice over Internet Protocol (VoIP) technology for cost-effective, flexible communication, better call handling, and an abundance of the latest call management features.

Reasons To Use a PBX

Effective communication is a major key that determines the overall success of modern business. So, using a better PBX system can skyrocket your business communication and deliver excellent customer service. Here are some of the reasons why to use PBX.

Saves cost

PBX systems allow businesses to save costs by bypassing external phone networks for internal calls within the company, resulting in lower telephone expenses. PBXs do not require expensive infrastructures, servers, or additional phone lines to operate. Additionally, it allows free communication between employees within the same PBX, regardless of their physical location, so it is one of the best reasons to use PBX.

Scalability

Businesses today are dynamic, so in order to meet the communication needs of the business, using PBX systems that are scalable can be very beneficial. PBX allows businesses to scale up and down with just a few clicks. With PBX, you can easily scale up to accommodate growing businesses or changing communication needs without hassle or extra infrastructure.

Creating professional Image

Having a PBX phone system that meets your business communication can lead to customer satisfaction if you choose a PBX system that consists of advanced call management features like call handling, forwarding, routing, auto attendant, IVR, and recording. These features will enable businesses to connect and collaborate seamlessly over the phone with customers, improving customer service and creating a professional image of the company.

Increased efficiency and productivity

Using PBX is one of the major reasons for increasing efficiency and productivity. In this interconnected era, seamlessly connecting with both employees and customers allows businesses to boost the productivity and efficiency of the employees. These integration features, collaborative tools, and communication tools allow employees to stay connected despite the physical location and work together over the internet without missing any important detail.

How to Choose the Right PBX Type for Your Business?

After knowing about the importance of efficient business communication, many businesses today are using PBX systems for their business. Also, with the rise of demand for PBX systems, the number of PBX system providers is increasing. So, if you are confused or want to choose the right PBX type for your business, here are some factors you need to consider before getting one:

Understand your business requirement

First and foremost, identify the communication needs of your business. Understand the call volume; what communication do you lack? What features does your present phone system lag? Where do your audiences call from? Are they national or international?

Type of PBX system

Choose a PBX system that suits the nature of your business. If your company wants reliable calling without degrading call quality, then prefer using the Traditional PBX phone system. If your business wants to minimize business communication expenses, communicate and collaborate seamlessly over the internet, then go for IP PBX, and if your business wants to reduce business communication expenses without compromising call quality and relish the best calling feature to enhance the business communication, hosted PBX is the best option.

Budget consideration

Budget consideration is also important; before choosing a PBX system, evaluate upfront costs and ongoing maintenance expenses. Generally, cloud-based PBX involves a lower initial investment and offers various other call management features than traditional PBX.

Compare different providers

Since there are hundreds of PBX providers, choosing PBX system providers can be cost-effective and helpful. So research and compare different providers, look out for customer reviews, ask for demos, and negotiate pricing.

Scalability options

Since modern businesses are dynamic, ask for scalable options before purchasing this feature. It will help your business easily add up extra phone lines and meet the communication needs of your business with its growth.

Consider Installation and Support

Make sure to choose a provider with experienced technicians for installation and configuration. Also, look out for the provider’s response times as well as support channel for smooth communication 24/7.

Conclusion

To sum up, PBX (or Private Branch Exchange) systems revolutionized business phone services, allowing companies to make internal calls between employees. Many businesses have shifted from traditional copper-wired phone systems to cloud-based and VoIP technology to keep up with the ever-changing needs of customers. Moreover, the PBX system allows several call management features and tools that allow them to connect better from any part of the world without any problem of installing additional hardware or requiring server rooms.

So, why not upgrade your PBX phone system with a reliable provider to connect seamlessly with the employees, provide better calling service, and boost productivity? 

FAQs

What is the purpose of the PBX system?

Private branch exchange (PBX) is a private telephone network used within an organization. The main purpose of PBX is to enhance business communication, allowing employees to connect seamlessly with each other and perform or receive calls outside of the organization. The PBX facilitates efficient communication both externally and internally and helps manage call operations.

How do you set up a PBX phone system?

In order to set up a PBX phone system, here are some simple steps you need to follow:

• Choose the right PBX system that suits your business type
• Install PBX system 
• Configure the network system or PBX system 
• Create Extension 
• Connect to your phone (VoIP or Analog)
• Configure your Inbound and outbound routes 
• Test your system 

What are the applications of a PBX?

PBX system is a valuable tool to businesses of any size to enhance the calling experience and collaborate better. Here are some of the applications of using PBX:

• Facilitate internal communication 
• Enhances external communication( customers, client, and stakeholders)
• Provides better call management features like call forwarding, routing, recording, transfer, voicemail-to-email, auto attendant, CRM integration and many more.
• Improved productivity and scalability.
• Coat Saving 
• Scalability option

What are the three main components of the PBX?

The main components of the PBX are:

• PBX server (hardware or software)
• Extensions
• Trunk lines
• IP phones or softphones
• VoIP gateways