In an age where almost every business is conducted online, it's more important than ever to have accurate accounting records. So many small businesses are turning to cloud-based accounting platforms like Xero and Wave. But with so many options on the market, how do you know which one is right for you?
Are you trying to decide which accounting software is right for your business? If so, you're in luck – we're here to compare Xero and Wave.
In this article, we'll look at both platforms and compare their features, pricing, ease of use, and more. So whether you're a small business owner or an accountant looking for the perfect software solution, read on for a comprehensive comparison of Xero vs. Wave!
Like most business owners, you're always on the lookout for new and better ways to manage your finances. You may have heard of two cloud-based accounting platforms, Xero and Wave, wondering which one is right for you. In this article, we'll do a deep dive into the features of both platforms to help you decide which one is best for your business in 2022.
Choosing the right accounting software can be a difficult task. Two of the most popular options are Xero and Wave. They both have their pros and cons, but which one is the best for your business? In this article, we'll compare Xero and Wave in detail so that you can make an informed decision. You'll know which software is right for you by the end of it!
Let's get started!
Who Should Consider Buying Xero?
Xero comes highly recommended by our team for use in any and all small businesses. The price range for Xero is from $11 per month to $62 per month, which is a very reasonable price considering the features and capability that are provided in return. In addition, there is an easy-to-use billing system, more than fifty different accounting and financial reports, and the ability to monitor and control inventory levels.
When compared to Wave, Xero is a generally more advanced and sophisticated product. Because of this, it is more complicated to utilise, but the vast majority of companies are likely to find that it is more useful.
Which Customers Should Buy Wave?
Freelancers and owners of small service-based enterprises will benefit most from using Wave's accounting software. Even while Wave is on the more affordable end of the spectrum when compared to its competitors, it still includes everything you need to get your accounting up and running quickly. In addition, you have the option of including payroll and bookkeeping services, as well as tax and accounting support, in your free basic plan.
Customers who were questioned by our team gave Wave overwhelmingly positive feedback, and many of them stated that they had neither the need nor the desire to transfer to a different programme in the near future.
Xero Plans
Having said all of this, the Early plan, which is the most fundamental one, does offer all of these capabilities; nevertheless, the Early plan is restricted to the following features:
- Five invoices and quotes
- Five bills
- 20 bank transactions
These limitations are removed when you upgrade to the Growing plan, which afterwards grants you the ability to send an endless amount of invoices and quotes, submit an unrestricted number of bills, and reconcile an unrestricted number of bank transactions. Last but not least, the Established plan brings the following skills to the table:
- Accept payments, receive bills, and send invoices, bids, and purchase orders in over 160 different currencies thanks to the multi-currency feature.
- Expenses: Keep tabs on your spending and easily manage cost claims using receipt scanning, labelling, and category organisation, among other features.
- Projects: Easily manage projects and their profitability with integrated time tracking, bids, and bills, as well as dashboard monitoring
Comparison in Detail Between Xero and Wave
1. Pricing
The pricing structure of Wave is one of the most significant advantages it has over Xero. Wave's accounting software is always and permanently free, with no monthly subscription fees, setup fees, or other hidden expenses ever incurred. In addition, the processing of credit cards and payroll will cost you money (more on this in a moment), but you can use any and all of Wave's features without paying a dime. There are no hidden fees, tricks, or restrictions on the services that can be used.
Xero, on the other hand, does not provide a free plan, although the prices of its subscription plans are comparable to those of other providers. You have the option to select from three different pricing plans ranging from $12 to $65 each month. The more expensive options provide unlimited invoices and bills in addition to additional capabilities such as expense claims and project management.
Before making a decision, you need to take into account the many additional costs that may be incurred. Even though Wave's accounting software is free to use, the free plan does not include payroll processing.
Payroll processing can be added for an additional fee of $20 to $35 each month, plus an additional $6 for each active employee or independent contractor paid. Wave includes a pay-per-use payment mechanism that you may take use of if you wish to collect payments. The rates for processing credit cards through Wave begin at 2.9% plus $0.30 each transaction. On the other hand, Wave only charges 1% to take ACH payments.
You may add Gusto's payroll starting at $39 per month + $6 per person if you decide to sign up for Xero accounting software.
If you require the assistance of a trained professional with your bookkeeping or tax preparation, Wave has you covered. Wave's accounting and payroll coaching is available for a one-time price of $229 if you require assistance in getting set up with the platform. You can additionally enrol in Wave's bookkeeping and tax assistance services for an additional monthly fee of $149. There is financial assistance available beginning at $1,500 per year.
2. Features
When it comes to the features, Xero really stands out from the competition. Due to the fact that Xero has more functionality than any other software in its category, it is an option worth considering for companies that have the most advanced accounting requirements.
Xero has all of the functions that you would expect from accounting software, such as a dashboard that can be customised, invoicing, quotes, administration of contacts, bank reconciliation, inventory management, management of accounts payable, and tracking of expenses. Xero also has more sophisticated functions, such as the ability to monitor classes, manage projects, monitor hours, manage fixed assets, and submit expense claims.
Wave contains all of the capabilities that one would expect from accounting software for small businesses. Wave's most significant capabilities are the ability to reconcile bank accounts, keep track of expenses, create invoices, manage accounts payable, manage contracts, and manage inventory. It is true that Wave is missing several of the more advanced functions that are available in Xero. However, a large number of smaller enterprises will be able to locate what they require with Wave, and the price is unbeatable (or lack thereof).
Let's compare and contrast Xero and Wave in a few key ways, beginning with their respective approaches to budgeting. You are able to create a budget in Xero for a period of three months, six months, 12 months, or 24 months thanks to the budgeting function. After that, you will have the ability to check your progress towards your monetary objectives at any time by reviewing a summary. There is no provision for setting a budget inside Wave.
Project management is another area in which Xero and Wave differ from one another. Users of Xero have the ability to use this function to generate invoices, manage time and expenses, and start new projects. The one and only catch is that you will need to purchase the most expensive plan in order to use this feature. Wave does not include a feature that can be used for managing projects.
Another area in which Wave and Xero are not identical is reporting. Although both products offer reporting, the reporting capability offered by Xero is more comprehensive. You have the ability to generate, browse, and print 55 distinct reports that cover a wide range of topics, including sales, cash flow, and budgets. There are only 12 reports available in Wave, but they cover the fundamentals like balance sheets, profit and loss statements, and cash flow.
Don't write off Wave just yet, despite the fact that it appears to be lacking in certain functions. There are a few features that are exclusive to Wave that are not available in Xero. One of these features is called Checkouts, and it's a tool for eCommerce that lets you generate a link to the checkout page and send it to numerous consumers at once. This link may be distributed via e-mail or text message, or it may be published on your website. This functionality is fantastic for companies who need to bill several customers all at once without having to create separate invoices for each of them.
Wave also provides superior tax support compared to Xero. When Xero first introduced its built-in payroll feature, it also introduced robust tax assistance. At this time, Xero only supports tax on sales. Wave's direct integration with H&R Block makes it more simpler for small business owners to file their taxes and make payments. There is a cost associated with utilising this service. You can also pay Wave Tax Service to analyse your taxes on a quarterly basis and file your federal and state returns for you if you desire the assistance of a qualified tax preparer.
3. Mobile Apps
Xero offers a number of mobile apps, some of which are compatible with iOS and others with Android. There are mobile apps available for usage on your mobile device that are called Xero Accounting, Xero Expenses, and Xero Projects. There have been a number of complaints regarding problems and crashes, despite the fact that a number of users adore Xero's apps.
Wave includes a mobile app for invoicing called Wave Invoicing, which enables users to generate invoices and take payments from customers when they are away from their desk. Although the app has received mostly excellent reviews, a few users have expressed their dissatisfaction with the fact that Wave does not yet have an app with all of its features.
Wave also includes the Wave Money app, which provides users with a bank account that is free of charge and automates accounting. Unfortunately, as of the time this post was published, Wave Money had not yet been made available to the general public; however, if you are interested, you can join up for the waiting list.
4. Ease Of Use
When you use Xero, you'll find that it has a user interface (UI) that is appealing, modern, and well-organised. Unfortuitously, mastering the software will require a fair amount of time and effort. Xero is not precisely user-friendly for novices, despite the fact that it is not as challenging to master as QuickBooks.
Learning how to use the software and navigating through all of its capabilities can be a time-consuming process if you are new to accounting. The good news is that Xero is not difficult to use once you get the hang of it, and there are many tools available to assist you along the way if you run into any difficulties.
The situation is very different with Wave. Even if you have never worked with accounting software before, you won't have any trouble using Wave because of how user-friendly and straightforward it is. In addition to that, configuring the software is a piece of cake.
In the event that you do encounter difficulties, there are a variety of services available to assist you in staying on course. If you are new to using accounting software, Wave might be the ideal place to start, unless you have the time to learn how to use a more complex accounting solution. If this is the case, you might consider using Wave.
5. Customer Service
Users of Xero have mentioned that the absence of phone help is one of the software's drawbacks. Even if you may get in touch with them through email, this might be an issue if you need assistance right away because it might take as long as a day for them to respond to your message.
If you require answers fast, though, there are fortunately a number of additional channels of support available to you. For instance, Xero provides in-application help, as well as a help centre called Xero Central, video explainers, a blog, podcasts, and a training programme called Xero U. You may also find Xero on several social media platforms.
When it comes to providing assistance to customers, Wave is somewhat comparable to Xero. Wave allows users of its free plan to communicate with the company via email. Response times are comparable to those of Xero's email support, taking approximately one day.
However, if you have chosen to use Wave's credit card processing or have added payroll to your account, you will also receive support by phone and chat. A help centre, a forum for the Wave Community, and a blog are some of the additional support options that are available to you through Wave in order to assist you in getting the most out of the software. In addition, Wave maintains a presence on the social networking sites Facebook, Twitter, and LinkedIn.
6. Customer Reviews & Complaints
The majority of the reviews on the internet for Xero are positive. The robust accounting functionality and extensive integrations are two of Xero's strongest selling points, according to users. Users that are happy with Xero frequently highlight its automations, robust reporting capabilities, and intuitive interface.
There are, however, a few criticisms that might be levelled against Xero. Some users found it simple to operate, while others were frustrated by the steep learning curve. The fact that there is no phone assistance is another popular gripe, and a number of companies have mentioned that they believe the programme is overpriced.
The customer reviews for Wave are extremely comparable to those for Xero; despite the fact that a few users have issues with the software, the vast majority of customers are pleased with it. Users are grateful for the free pricing structure, which does not restrict the services they can use or provide them with an interface that is out of date.
Users are also quite fond of the professional invoices that Wave provides, and others value the fact that the software is simple to use and operate. However, there are a few recurrent concerns regarding Wave, and these complaints centre primarily on the platform's lack of advanced capabilities, its small number of third-party connectors, and its mobile app selection.
7. Accounts Receivable
During our assessment of accounts receivable (A/R) management software, Xero performed admirably. In Xero, you are able to manage client accounts, establish sales pricing, add customers, send invoices via email, accept partial payments, and take short payments. The invoicing feature of Xero is excellent in terms of its functionality; nevertheless, it does not give consumers the option to customise the appearance of the invoice. On Xero, for instance, users are unable to alter the designs or colours of their invoices.
Wave, on the other hand, is not too far behind because it contains capabilities that are comparable to those of Xero. These features include the ability to send invoices through email, the creation of recurring invoices, the management of customer accounts, and the acceptance of short payments. One of the key differences between Wave and Xero is that Wave is unable to generate credit memos and sales receipts for sales that have already been paid for.
If you are not very concerned with customising the invoice style or template, Xero is the platform that we advise going with. If, on the other hand, your company only requires basic A/R services, Wave may be the right choice for you.
8. Accounts Payable
The accounts payable (A/P) management system that Xero offers is equipped with 21 of the 22 features that we look for in an A/P system. The lack of support for recurring payments is the sole functionality that Xero lacks. Xero customers are need to manually enter their payments for regular bills, but recurring bills can be recorded in the software. In most cases, other accounting software packages will record recurring expenditures directly to the bank or credit card that the user has entered in the programme.
In comparison to Xero, Wave's accounting and payroll solution is lacking in depth. The system that Wave uses is fundamental because it includes the fundamental components of an A/P management system. These components include the ability to create suppliers, record spending, examine billings for inventory purchases, and view delinquent invoices. Wave is unable to generate credit memos, add unbilled labour and expenses, or view expenses that have not been billed but have been incurred.
The A/P mechanism used by Wave is straightforward and uncomplicated. If you require more extensive A/P features, such as recording and applying for vendor credits, utilising standard service item descriptions, and purchasing inventory, we advise going with Xero rather than Wave.
9. Fixed Assets
Wave does not have many tools that can assist you in managing your fixed assets, such as calculating the costs of depreciation and keeping track of the total amount of depreciation. In the meantime, Xero is able to handle fixed assets from the time they are initially recorded through the time they are eventually disposed of.
Instead of going with Wave, you should consider switching to Xero if your small business possesses a number of important fixed assets that are essential to its operations.
10. Inventory
Xero is capable of managing inventories from the point of purchase to the point of sale, including the segmentation of your inventory expenses into COGS and ending inventory. Nevertheless, the inventory features of Wave are insufficient to meet even the most basic requirements for inventory tracking.
If you acquire and sell an inventory, Xero is the better option than Wave in our opinion.
11. Project Accounting
We award Xero a score of 10 out of 10 for its project accounting capabilities since it offers all of the tools that we require, most notably project estimations, cost assignment for projects, and cost variance analysis. Wave, on the other hand, can only be used to generate estimates for a project; it cannot monitor costs on a project-by-project basis.
Due to the fact that Xero has all of the capabilities that we want, it is our top recommendation for accounting for projects. On the other hand, if your demands are more focused on the creation of estimates alone, you should think about using Wave.
12. Integrations
Xero is at the head of the class when it comes to the number of integrations it offers. Over eight hundred different apps and software programmes can be connected to your Xero account with Zapier, one of the more than 800 connections that are available through Xero. In addition to that, it offers an API for programmers.
Wave, on the other hand, does not come close to meeting expectations when it comes to integrations. Etsy, PayPal, and Shoeboxed are some of the services that are directly integrated with Wave. Wave, to its users' good fortune, also interfaces with Zapier, giving them even another option for connecting the business tools and software they use. Additionally, a developer API is at their disposal.
13. Advanced Functions
Xero developed its software specifically for companies that manage inventories as well as fixed assets. If you have been keeping track of your fixed assets in a spreadsheet, uploading that data into the software only requires one additional step. Xero will automatically calculate depreciation and keep track of disposals once the asset has been entered. Wave does not own any capabilities related to fixed assets.
Wave does not have a function for managing projects either. Time tracking, the capability to designate an expense as being chargeable to a client, and the capacity to collect deposits on projects are all included in Xero's offering. Having said that, the projects section of FreshBooks provides you with a great deal more.
In terms of more advanced features, Xero outperforms Wave; nevertheless, it is important to note that not all businesses will want those additional options. For instance, a creative firm that creates projects and invoices clients on an hourly basis may wish to use Xero, whereas a business that runs in a different manner may find the free alternative offered by Wave to be more appealing.
The Verdict
If your company carries and sells inventory as well as has to track fixed assets, the most compelling argument to select Xero versus Wave is because of these requirements. You'll always have a good handle on turnover and reorder numbers thanks to Xero's inventory reporting. Integrated fixed assets also reduce the need to record separate journal entries for depreciation, which is another advantage.
You are able to bill for hours spent with the help of Xero, which also contains projects and syncs its inventory with invoices. If such features are "must-haves" for you, you won't be able to use Wave because it lacks certain capabilities; instead, you'll need to use Xero.
There are only a few key distinctions between the two services, but none of those are applicable if your company does not require them. Wave's price, which is currently set at zero, is impossible to beat. Even if you pay more for payroll processing, it can still work out to be less expensive than using Xero.
Getting started. If you sign up directly from the Xero App Store, your B2B Wave account will be automatically created and Xero will be connected.