Home VoIP Services What is a Virtual Phone System & How Does It Work?
Jeff Beckman Tech Writer Author expertise
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In today’s interconnected world, communication is vital to businesses’ success. The era of traditional phone systems, with their limitations and maintenance costs, is gradually phasing out, making way for alternatives such as Virtual Phone Systems. The virtual phone system allows users to make and receive calls from a single business phone number on a mobile device, desktop application, or desk phone.

Virtual phone systems have fewer constraints than traditional phone infrastructures. Numerous benefits accompany these cloud-based mediums, particularly for businesses transitioning to remote work environments.

This article explores the concept of virtual phone systems’ working mechanism, features, and impact on organizations, individuals, and industries.

What is Virtual Phone System

Overview of Virtual Phone Systems

A VPS (virtual phone system), an Internet or cloud-based platform, is a communication media that facilitates voice and information transmitted through the Internet.

As the name implies, the virtual system allows users to establish connections without extensive hardware, wired networks, or physical structures. 

The VPS allows users to send calls, texts, and raw data on various devices using a personalized phone number.

It is worth noting that the media is a cost-effective type. Hence it is possible to achieve growth and team productivity at little or no cost. 

That’s why more people explore and utilize these Virtual phone systems instead of landlines with high maintenance costs. Moreover, landlines won’t function in and out of the office in a remote work setting.

These constraints place them at a disadvantage, taking them off the market for new technologies like virtual phone systems to soar.

The Operating Mechanism of Virtual Phone System Work

Virtual phone systems utilize VoIP tech. They transmit data packets through the Internet instead of passing them on traditional copper wires. 

This transmission usually involves processes, but the setup is quick and operates solely on networks.

Most importantly, a designated virtual phone system provider maintains and controls how you make or receive calls. 

So, your setup is guaranteed to work anywhere and on any device with an excellent connection to the Internet. 

Even in bad weather conditions that may hinder the optimal performance of virtual phone systems, efficient providers often have a network of other connected servers for backup.

The Public-Switched Telephone Network (PSTN) infrastructure oversees this connection, operating as a large conglomerate of intertwined servers.

You can take official calls outside your office space, forward calls from one device to another, hold conference meetings, auto-answer inbound calls, re-route, and even receive voicemails via email. 

Ultimately, the virtual system is not limited to calls alone. Text messaging has proven to be another means where the capacity of the VPS can be adequate. 

Unlike the Landlines that work differently, tasks can be shared between employees through texts, and customers can quickly request orders or send complaints. 

These features show the effective integration of virtual phone systems with other communication methods and how it implements customer relationship management (CRM) tools for businesses. 

Virtual Phone System vs. PBX: Key Differences

PBX simply stands for a Private Branch Exchange, a traditional kind of phone system that implements the use of analog signals

Notably, most individuals and companies use PBX and work effectively on them. However, there are differences in its operational mechanism when compared to VPS. 

First, PBX systems rely on hardware and require on-site installations. So, their private networks are only within the organization’s environment. While VPS, on the other hand, operate a cloud-based technology system making them easier to manage and access.

There is also a cost-effective offer when you use VPS services. There are flexible plans, which are fantastic perks when placed side by side with the installation expenses of PBX systems. 

In addition, looking at cases where an upgrade is required, PBX systems are harder to scale since they would require physical changes and expansion in size. 

Meanwhile, scalability in virtual servers is easy as changing SIM cards on your smartphone.  

Finally, there is no valid comparison between these two regarding features and integrations. Although PBX offers basic integrations like voicemails, call sharing, and re-routing, their challenges with other user communication tools are yet to be resolved. 

With VPS, processing a more comprehensive range of collaborative tools in CRM and CMS is seamless and assures communication efficiency.  

However, the choice is open to everyone depending on individual preference, knowledge of system types, budget, office settings, and business needs. 

Why You Should Use a Virtual Phone System

why use virtual phone system

Several individual and corporate bodies are swinging toward virtual phone systems, not because they are trendy but for the benefits. 

You could be planning an office expansion or seeking a communication media that helps you stay active from a remote location. In whichever case, conventional systems will not do the magic for you.  

Here are some virtual system perks to catch your attention:


When it comes to mobility, virtual phone systems allow for great convenience. Remote work can be done undisturbed without geographical barriers or range limits. 

No extensive configurations are necessary; you don’t have to run wires around your homes or offices. The option to maintain your hardware phone lines is on the table if you want to keep them intact. 

In such cases, after purchasing your subscription from a provider, you just have to plug in your VoIP adapter, and that’s it. 

Thus, as much as internet connection remains viable, workforces can do their jobs and improve productivity. 


Desk phones have been the usual form of communication in offices for years. These desk phones work through wired systems to receive calls and pass information. 

However, in cases where the office’s occupant is unavailable, important messages can be delayed or lost. 

The flexibility of virtual phone systems completely eradicates these problems; hence, users can answer calls and reply to messages from any device with an IP address. 

These devices are our usual personal computers, tablets, and smartphones. For particular purposes, requests can be made for wireless VoIP devices that match specific needs based on Session Initiation Protocol (SIP) standards. 

Cost Effective

With a virtual phone system, there is provision for the highest value at low costs

Every service provider who offers virtual phone services has a brochure of paid plans with features they cover. There are full-time office plans and small business plans depending on the kind you desire. 

The best advice would be to go with a pocket-friendly plan that will solve your needs. You will discover that no matter the subscription, costs will be lower than landline maintenance. 

Plus, you can enjoy built-in features such as free toll numbers, privacy, and easy scalability. 

Professional Touch

A virtual phone system is highly beneficial in helping business bodies enhance their professional image. 

Customers love to see a company with a good hold of their ethics, values, services, and branding. 

Customized greetings, call queuing, routing, and automatic responses to requests create a reliable, sustainable, and polished impression of your business. 

These features promote confidence in the minds of your customers and are all part of the virtual phone system package. 

So having an efficient phone system to help personalize user experience improves customer satisfaction and loyalty. 

Effective Communication Management

Features such as voicemail, call forwarding, interactive voice responses (IVR) based on automation, and call recording are some of the tools that bring this benefit to light. 

Virtual phone systems seamlessly integrate collaborative tools like CRM software, customized phone numbers, instant messaging, auto-recorded conference calls, and emailing to empower business communication channels and streamline workflow. 

When there is good communication in a business sector, team members have a practical understanding of work requirements. Also, there’s an even distribution of information, ensuring an excellent working relationship. 

This approach can be directed to your clients, too, as you can use a branded number for your clients to reach out to you. These results are productivity, cohesive teamwork, and customer satisfaction.  

Provision of Analytical Data

When analyses are curated, improvements are more likely to be made. In addition to other benefits, virtual phone systems track and report your real-time call analytics. You usually receive these reports daily, weekly, or monthly based on your selection. 

For small businesses and major-scale enterprises, this feature of VPS can help trace your results to the volume of calls or leads generated. 

Sales questions can be answered using the analytical data records, and you can follow up on progress made in a specific timeframe. 

For example, if you are working with a team of customer representatives, you can calculate the busiest days of the week, recognizing team efforts individually and accurately studying performance reviews. 

Things to Look Out for When Purchasing Your Next Phone System

You are probably convinced that you need a virtual phone system. The next question would be determining the right type to satisfy your needs. 

Here is a buyer’s checklist for your next purchase. 

  • Features and Functionality: It is essential to read the product’s capabilities before purchase. You should consider features such as call recording, auto-attendant, conferencing, call routing, and voicemail. 
  • Tailored Budget: This item is checked by assessing what your wallet can afford. There are flexible plans in each service provider catalog. However, consider the long-term value of each, total ownership cost, and return on investment. 
  • Vendor Reputation and Reviews: Reviews are significant for every product. You can conduct due research on any service provider you want to patronize on official internet sources. A reputable provider would guarantee a standard product warranty and excellent maintenance routine. 
  • User Friendliness: A virtual phone system that is easy to understand and use with minimal training is essential. Ensure to evaluate the user-friendliness of any plan you want to buy. Look out for service providers with a good history of comprehensive training guides and transition support. 
  • Future Improvement Plans: Existing service providers have roadmaps of what their service intends to achieve and sustain in the long term. These service providers have a concrete picture of where they want to get to and are not stagnant in the growth processes of their products. Carefully consider this set of providers, as you will significantly benefit in their quest to please their customers.   

By taking note of these factors, the likelihood of making the right choice is high, and it will ensure you meet your needs while enhancing efficiency in communication. 


Significant strides in technological upgrades are increasing daily, and these virtual phone systems represent a part of the evolution. 

They have taken over the traditional landlines by transforming how businesses operate and communicate, paving the way for organizations to advance in the modern business scheme.

By embracing cost efficiency, flexibility, mobility, streamlined customer management tools, and integration features, these virtual systems help companies to build a professional image and satisfy clients. 

The growth is continuous, and there is room for more innovation to facilitate collaboration, drive success and shape the future of communication in this digital age. 


What is the Easiest Way to Set Up a Virtual Phone System?

How Much Does a Virtual Phone System Cost?

How Do I Choose the Right Virtual Phone System?

Jeff Beckman Tech Writer

Jeff Beckman Tech Writer

Jeff Beckman is a content writer and copywriter with 5+ years of experience in technology. He provides enjoyable, educational content through his experience working for various publications.

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