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Virtual Phone System: Definition, Advantages, and Best Providers

what is a virtual phone system

Virtual phone systems have become popular staples among small businesses and large enterprises. They are a cost-efficient and highly accessible way to streamline communications without a physical system’s hassles.

Switching to virtual telephones can increase customer satisfaction, improve office productivity, and prevent miscommunications. Still, knowing what to look for in a system and provider can spell the difference between a setup that works and a setup that doesn’t.

Learn the ins and outs of virtual phone systems in our guide.

What is a Virtual Phone System?

Virtual phone systems are cloud-based solutions enabling businesses and individuals to manage phone communications over the Internet. They operate independently of traditional phone lines and physical hardware, making them a flexible and cost-effective alternative to traditional phone systems.

How Does a Virtual Phone System Work?

A virtual phone system functions on cloud-based technology, relying on the Internet to facilitate communications. The system handles toll-free and local phone numbers, connecting calls between users. The best part is you don’t need to worry about maintaining phone lines or switchboards; the virtual phone system provider takes care of that for you.

It operates using Voice over Internet Protocol (VoIP), transmitting calls over the Internet to ensure high call quality enabling users to forward calls to mobile devices or computers. Overall, virtual phone systems make it convenient to work from different locations.

Advantages of Using a Virtual Phone System

As we mentioned, virtual phone systems have significant advantages over traditional setups that include the following:

  • They save you money: Virtual phone systems eliminate the need for expensive on-premises hardware and maintenance costs. Businesses can save on long-distance charges, as calls are often included in the monthly subscription or offered at lower rates.
  • They manage calls better: Thanks to features like remote accessibility, auto attendants, and call routing, virtual phone systems can manage calls better than their traditional counterparts. Users can customize call-handling rules based on business hours and caller preferences.
  • They integrate with business tools: Suppose you already have existing CRM systems. You can quickly hook up your virtual phone system, streamlining workflows.
  • They improve global reach: If your business expands, virtual phone systems can help keep you connected to international customers and stakeholders.
  • They’re easy to set up: Unlike traditional systems that require lots of equipment and hardware, most virtual phone systems are plug-and-play. They’re also easy to manage on user-friendly web interfaces. 
  • They’re easy to scale: Do you need to add or remove extensions? You can easily do so without hooking up or unhooking anything physically.

What to Look for in a Virtual Phone System

Virtual phone systems offer a range of features that traditional phone systems often lack. When shopping for a virtual phone system, here are a few factors to consider:

  • Main features: Ensure the virtual phone system provides essential call management features (call forwarding, call routing, voicemail, auto-attendant, call recording, etc.). These features are crucial for efficient call handling and professional customer interactions.
  • Reliability: Choose a virtual phone system with a reliable infrastructure, redundant data centers, and robust disaster recovery mechanisms to prevent downtime.
  • Cost: Compare pricing plans and packages from different service providers. Find a transparent pricing structure that aligns with your business’s communication needs and budget.
  • Trials and demos: Opt for a virtual phone system that offers a trial period or demo to test the system’s features and usability before committing.
  • Integrations: Look for a virtual phone system that integrates well with your existing business tools, such as CRM software or other communication platforms. 
  • Customer support: While most virtual phone systems are intuitive, you may experience the occasional downtime. Thus, you should find a provider offering robust and always-on customer support. 

Must-Have Features of a Virtual Phone System

Certain features are essential to ensure smooth communication and efficient call management when selecting a virtual phone system. Here are a few features you shouldn’t go without:

  • Auto-Attendant: This automated receptionist greets callers with pre-recorded messages and provides call routing options based on their selections. It reduces the manual load on human agents.
  • Call forwarding and routing: The ability to forward calls to different devices or numbers based on predefined rules or customizable schedules can streamline call pipelines.
  • Voicemail to email: Take voicemails further, making them more accessible via email.
  • Virtual numbers: Access to local, toll-free, or international virtual phone numbers can establish a presence in various regions without physical offices.
  • Call recording: Recorded calls are helpful for training, compliance, or quality assurance.
  • Text messaging: This capability is essential if agents can’t take a call or a customer has a query answerable through text.
  • Analytics and reporting: Detailed call analytics and reporting features help monitor call performance, call volume, and other relevant data for informed decision-making.

Virtual Phone System Drawbacks

While virtual phone systems offer numerous benefits, they also have some drawbacks that businesses must know:

  • They depend on your internet connection: Virtual phone systems rely on a stable internet connection. Connection issues and latency can disrupt call quality and lead to missed calls.
  • They’re not always secure: Since virtual phone systems operate over the Internet, they are susceptible to potential hacking, eavesdropping, or unauthorized access to calls and data.
  • Their emergency services are limited: Unlike traditional phones, not all virtual phone systems have the same access to emergency numbers.
  • They rely on providers: Your phone system’s reliability and performance depend on the service provider. If the provider experiences technical issues or service disruptions, it can affect your business’s communication capabilities.
  • There may be integration challenges: While most virtual phone systems can integrate with many CRMs, some may not be compatible.
  • There may be a learning curve: Transitioning to a virtual phone system may require users to adapt to the new technology and features. Proper training and support are essential to ensure a smooth transition.

Best Virtual Phone System Providers

Choosing a virtual phone system provider can be tricky, especially because so many options are available. Consider this table of the top service providers to help narrow your decision:

PROVIDERULTATELRingCentralGoogle VoiceAXvoiceOnsip
Virtual Phone NumberYesYesYesYes at $3.99/moYes
Support Hours24/724/7N/A8:00 am – 7:00 pm8:00 am – 7:00 pm
International CallingYesYes, with chargesYes, with chargesYesYes, with charges
Free TrialYes, varied15 daysN/ANo30 days
Cheapest Rates$15.95/mo$19/moFree$8.25/mo$8.95/mo

Virtual Phone System FAQs

How much does a virtual phone system cost?

Most virtual phone systems cost between $25 and $50 per user per month. However, costs can vary according to the specific service provider, features required, pricing plan, add-on features, hardware and equipment, and potential discounts.

What’s the difference between virtual phone systems and PBX?

The connectivity method is the main difference between a virtual phone system and PBX. PBX systems are hooked up to physical telephone lines, whereas virtual phone systems depend on an Internet connection.

How do I know if my business needs a virtual phone system?

Your business could use a virtual phone system if it’s expanding, can’t afford a traditional PBX system, requires more flexibility, or employs remote workers.

Can a virtual phone system be used at home?

You can use a virtual phone system from your home office with a reliable Internet connection.

What phone numbers can I use in a virtual phone system?

You can port your business phone number, which takes one to four weeks. Alternatively, you can pick a new virtual phone number with an extension.


As consumers continue to demand instant answers to their questions, incorporating a virtual phone system into your process just makes sense. If you want to handle incoming and outgoing calls with utmost reliability, ULTATEL is the place to start.

Our robust virtual phone systems are scalable, affordable, and ideal for any niche.

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