No matter your business size or industry, you should invest in an accounting software to manage your finances. This software facilitates invoicing, expense tracking, payroll, and lessens your chances of financial mismanagement. You’ll likely grant your accountant access to the software so they can keep your books balanced, prepare your business for tax season, and identify opportunities to improve the financial health of your business.
This article identifies key differences between Xero and Wave. We’ll compare and contrast their features, pricing, usability, and customer service availability. We’ll also make recommendations about who each tool is best for based on hours of in-house research and product testing.
Xero & Wave Comparison Summary
Xero and Wave are two accounting solutions that we researched and tested firsthand. We spent weeks researching accounting platforms and interviewed current customers. Xero was given a rating of 91, while Wave received a rating of 86.
Xero received its score because it’s a moderately advanced tool at a very reasonable monthly price. It’s also fairly user-friendly, which is hard to come by in accounting software. Wave was given a rating of 86 because while it’s a valuable freemium tool that provides the ultimate level of user-friendliness, it was difficult to contact customer support.
Below is a breakdown of our four review criteria and the ratings that Xero and Wave were given in each category.
|Criteria||Analyst Rating||Features||Usability||Pricing||Customer Support|
Xero is one of the best accounting solutions for small businesses because, while it’s not as advanced as the top tools on the market, it comes close for a fraction of the cost. Two professional bookkeeping companies we interviewed use Xero because they find it offers nearly the same functionality as QuickBooks Online, but is much cheaper and easier to use.
Wave is a freemium accounting software that’s best suited for freelancers and service-based companies, given that the inventory management features are elementary. Because the basic accounting features are entirely free, you can get started with the software in just a few minutes.
Here are a few quick points to summarize who we recommend each tool for:
- You want a software that provides high performance for a relatively low monthly cost
- You sell products or services, or both
- You’re interested in more than 800 pre-built integrations with Xero’s Marketplace
- You’re a freelancer or have a small, service-based business
- You want the flexibility to add only the paid features that you need
- Your ultimate goal is ease of use and flexibility
Table of Contents
- Xero & Wave Comparison Summary
- Who Should Purchase Xero?
- Who Should Purchase Wave?
- Xero & Wave Price Comparison
- Xero & Wave Feature Comparison
- Bottom Line
Who Should Purchase Xero?
We broadly recommend Xero to all small businesses. Xero pricing runs from $11 per month to $62 per month, which is incredibly affordable for the features and power that you get in return. Invoicing is easy, there are more than 50 accounting and financial reports, and you have the ability to track and manage inventory.
Compared with Wave, Xero is a more sophisticated product overall. It’s correspondingly more difficult to use, but most businesses will likely find it more valuable.
Who Should Purchase Wave?
Wave is the best accounting software for freelancers and small service-based businesses. Though basic compared with its more expensive counterparts, Wave has everything you need to get up and running with accounting quickly. You can also add payroll, as well as bookkeeping, tax, and accounting services, onto your free base plan.
Customers we interviewed were all extremely complimentary of Wave and indicated that they had neither the need nor the desire to switch to a new software anytime soon.
Xero & Wave Price Comparison
Wave is a freemium tool, meaning that the accounting, invoicing, and receipt capture features are free. On the other hand, Xero costs between $11 and $62 per month.
Xero Pricing Details
Xero has three plans to choose from and their Growing Plan, which costs $32 per month, is their most popular option.
Wave Pricing Details
Accounting, receipt capture, and invoicing are entirely free of charge. There are processing charges for payment processing, and the add-on features like payroll and bookkeeping services start at $20 per month.
Xero & Wave Feature Comparison
Xero and Wave generally offer the same features, but Xero’s are more detailed and powerful. However, Xero does not offer the tax, bookkeeping, and accounting services that Wave has.
|Vendor & Client CRM||Yes||Yes|
|Inventory Management||Yes||Yes - basic|
|Accounting & Bookkeeping Services||No||Yes|
Top Features: Xero
Xero has a full-featured marketplace, exceptional reporting, and highly customizable invoices and dashboards. As mentioned above, while the tool isn’t as user-friendly as Wave, it’s still not as difficult to use as comparable products like QuickBooks Online and Zoho Books. For a more in-depth overview of all of Xero’s features, read our Xero review.
Xero’s invoices are heavily customizable, though easy to create. You’ll be able to preview invoices, import customer invoices, set payment reminders, and customize the layout of your documents. You’ll also be able to send quotes in much the same way.
While invoicing with Wave is just a bit easier, you have more customization options with Xero.
As you’ll see below, you can input items you purchase and sell into the tracked inventory section. You’ll set the unit price, accounts, and tax rates for all the items. You’ll also put descriptions for your suppliers and customers to provide a bit more context.
Wave’s inventory management is nowhere near as detailed, which is why we recommend that product-based businesses choose Xero.
One of Xero’s biggest bragging points is their marketplace, which has more than 800 pre-built integrations with nearly any tool that businesses would need to integrate with accounting. Applications are also divided into type and business category, so for example, all hospitality-related applications are in the same group.
Top Features: Wave
Wave’s best features are the dashboard, invoices, and services. The reporting section is a bit thin, but you can export all your information to run more advanced reports in other applications. To read further into Wave, check out our full-length Wave review.
Advisors: Tax, Accounting, & Bookkeeping
Wave offers advising services for accounting, bookkeeping, and tax purposes, all starting at $149 per month. While the pricing can get quite high, it’ll be beneficial for small businesses without an in-house bookkeeper to sign up for these services. Xero also doesn’t offer these, so if you want an in-house advising service, Wave is your better bet.
The Wave dashboard, as you can see, offers crucial graphs and information regarding payments. You can not only see your overdue invoices and bills, but add customers, vendors, send invoices, and more.
Wave Money, the business banking feature offered by Wave, is a bank account with built-in bookkeeping. There are no monthly fees or minimum balances, and it’s FDIC insured. Though this is currently in a limited release and offered only to single-owner businesses in the United States, Wave intends to make it more widely available soon.
Xero is more advanced than Wave and should be used by any product-based business that requires more than entry-level reporting. Xero is one of the best tools on the market and, compared with other accounting solutions, offers high-level power for a very reasonable price.
Wave is more of an entry-level solution that can scale relatively well as your business grows. Because the inventory management is somewhat lacking, it’s not the best option for product-based businesses. It’s one of the most user-friendly and modern platforms on the market, making it ideal for those who are just starting out with accounting software.