What is PABX? The business telephone system explained

Telephone switchboards and operators may be a thing of the past, but business callers still need to reach the right person, extension or department. These days, they're connected by internet-based technology called PABX. But what exactly is PABX?

PABX is short for private automatic branch exchange. It's the automated equivalent of the old manual PBX system, which saw rooms of operators racing to plug copper wires into ports when connecting business callers. These days, PABX does the connecting automatically, and instantly. Most PABX systems are cloud-hosted, so businesses don't even need hardware to use it, let alone a room full of switchboard operators.

With business budgets under pressure, how much does all this sophisticated functionality cost? Much less than a traditional business phone system. Providers such as 8x8 and RingCentral offer hosted VoIP-based PABX packages for under £10 per user, per month. Even their most advanced plans, with unlimited storage and unlimited international business calling, come in at under £30 per user, per month.

Below, we'll explain what PABX does and how it works with VoIP to run all of your phone needs through the internet. Then we'll discover the current best PABX deals for your business.

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The UK's landline network will be switched off in 2025, taking analogue switchboards and ISDN with it. If your business hasn't yet found its ideal IP-based phone system, now's the time to choose.

Internet-based phone technology such as VoIP (voice-over internet protocol) and PABX are now business essentials, vital for enabling your customers and clients to reach you. The terms are sometimes used interchangeably, and they very often work together in the same business telephone system; but they're not the same thing. VoIP is the technology that takes care of the voice (or video, or message) data transmission, while PABX manages the connections.

As you'd expect from a good telephone operator, PABX can also log messages, forward calls and juggle hold queues. The best PABX systems can even act as a fully featured communications platform, with CRM integrations and custom interactions to help your staff and delight your customers.

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The main benefit of switching to a VoIP-based hosted PABX telephone system is the cut in costs to your business. The analogue network was a hugely expensive part of running an organisation. Not only did you have to pay landline prices (even when people inside your company wanted to call each other), but the cost of installing multiple phone lines was significant.

With cloud-hosted VoIP and PABX, you no longer need a switchboard of any kind, because all call data is handled by the provider. You don't need special handsets or headsets either, because most PABX systems work using mobile apps. This lack of hardware is part of what makes a PABX system infinitely scalable, allowing your communication system to grow with your business – and it's ideal for keeping a remote workforce in touch with each other.

PABX is also extremely efficient. Call response times are much faster than with a manned or electronic switchboard, delivering a better experience for your customers, who are more likely to return as a result. You also get to customise features such as your hold music and voice responses, giving you a great opportunity to personalise your brand and engage with your customers and clients.

The best PABX plans include all the features you'd want from a business telephone system, such as call transfer, call waiting, automatic call forwarding, and even a virtual receptionist. Many also surpass traditional phone systems by adding the kind of customisable features and workflow integrations you would expect from a CRM. Here are a few to look out for.

If you're just starting out, a fully hosted VoIP-based PABX phone system that lets you run all calls and other communication functions through mobile apps will be all you need. But if you're a more established business, you'll need to make sure that your PABX plan and provider integrate well with your existing communications infrastructure.

Here are a few things to consider...

All these plans include VoIP calling and hosted IP-based PABX:

8x8 is named "best phone system for a growing business" in our roundup of the best business telephone systems. The £10 per user, per month Express plan is a great choice for small businesses with up to five users, with basic auto-attendant, voicemail, team messaging and videoconferencing. The X2 tier (£19 per user, per month) gives you unlimited users, advanced telephony features such as presence detection and document sharing, unlimited voice calls to 14 countries, and an impressive range of integrations that includes Salesforce, Slack and Zoho. Top tier, X4 (£47 per user, per month), adds advanced call handling and supervisor analytics.

Yay.com is the best-value VoIP-based PABX provider you'll find. At less than £6 per user, per month its Starting Out plan offers amazing value with voicemail, hold music and 100 minutes of calls that you can make through your browser, mobile app or compatible desk phone. The Flying High plan (£16.79 per user, per month) adds more bundled minutes plus video calling, IVR menus, voicemail transcription and integration with tools including Zoho, HubSpot, Microsoft and Google.

RingCentral is a great choice for ambitious startups. Its Essentials plan (£8 per user, per month) offers voicemail, messaging, 100 bundled minutes, call logs and apps. Standard (£15 per user, per month) adds a superb virtual receptionist plus automatic call recording, advanced call handling, unlimited audioconferencing, HD video meetings and lots of platform integrations, while Premium (£20 per user, per month) adds voicemail transcription, analytics and CRM integrations.