A PBX (private branch exchange) system is the hardware that controls the phone lines and extensions of a company. The PBX system exchanges calls between the internal phone extensions within your office as well as manages the inbound and outbound calls. The PBX routes incoming calls to the relevant extension and creates access to the shared outside telephone lines for outbound calls.

Combining the technology of VoIP with a PBX creates an IP PBX system. IP PBX phone systems work over the Internet instead of through the traditional phone lines. IP PBX systems can be in-office or hosted. Hosted IP PBX systems are the most cost-effective choice for smaller businesses.