PBX (Private Branch Exchange) is a telephone exchange that serves a particular business or office building, as opposed to a common telephone or telephone company that operates for many businesses or the general public. PBXs make connections between internal phones in a business or other private organization and connect them to the public switched telephone network (PSTN). The traditional wired PBX system has evolved into technology that makes advanced solutions possible, such as the cloud-based and IP-based phone system.

PBX phone systems perform four main call processing functions:

• Establish connections between the telephone sets of two users

• Keeping the connections as long as necessary

• Disconnection of connections when users hang up

• Provide information for accounting purposes

​

Cloud PBX systems, also known as VoIP PBXs, IP-PBXs, hosted PBXs, virtual PBXs or IPBXs, use the Internet Protocol to make calls. Most modern PBXs support VoIP, which simply means Voice Over Internet Protocol. A Cloud PBX system consists of one or more VoIP-enabled softphone phones and an IP PBX. The phones, registered with the IP PBX server and when making a call, the IP PBX establishes the connection. VoIP phones can be simple software-based softphones or specific hardware devices that look very similar to a regular or cordless phone.