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Xero vs Wave Accounting vs Outright vs FreeAgent vs Kashoo

I am trying to get away from a Desktop accounting solution. After years of QuickBooks, I am frustrated with how complicated it is to integrate it with other systems. Here are the ones that I reviewed:

Xero
FreeAgent
Outright
Wave Accounting
LessAccounting
Kashoo

I want to see how Invoicing, Billing, Reconciliation, Financial institution integration and API works. I need support for Multi-currency and Sales Tax at a bare minimum.

On average, I spent about 15-20 minutes with each application for the first run. Then I went back to explore more if necessary.

Invoicing – Income

Outright – does not have an invoicing option however it integrates with other tools like Harvest or Freshbooks.

Xero and Wave Accounting – invoicing is similar to how QuickBooks works. You create Income Items (such as Carpet or Floor Cleaning) and map them to Income accounts. Setup is straight forward and user interface is easy to use. In both applications, you can simply create a new item and map to Income and Expense settings directly from the invoicing or billing screen.

FreeAgent – I found the user interface to be confusing. You first create an empty invoice where you select the client and date, and add items in the next step. I don’t see the necessity for this extra step. You can create Sales Items, however you cannot map them to different accounts so everything goes under the same bucket. FreeAgent supports Projects so if you are looking to link invoices and bills to particular projects, you may want to check that out. I am not interested in this feature.

LessAccounting – Interface is easy to use. It does not support Income Items so everything goes under the same bucket.

Kashoo – Interface is easy to use. You can map invoice items to different Income Accounts, however, it does not support Income Items

Winner(s) – Xero and Wave Accounting

Billing – Expense

Outright – does not have a billing option.

Xero and Wave Accounting – billing is similar to how QuickBooks works. You create Expense Items (such as Carpet or Floor Cleaning) and map them to Expense accounts. Setup is straight forward and user interface is easy to use. In both applications, you can simply create a new item and map to Income and Expense settings directly from the invoicing or billing screen.

FreeAgent – You cannot itemize bills in FreeAgent. Again, you can link them to Projects if you wish.

LessAccounting – Billing and Expenses are combined in LessAccounting. This will work fine for an individual and a small company but you may find the billing a bit limited if you work with a number of vendors. You can map the expenses to categories under chart of accounts, however it does not support Expense Items. You can link expenses to customers.

Kashoo – Interface is easy to use. You can itemize bills and map different Expense Accounts, however, it does not support Expense Items

Winner(s) – Xero and Wave Accounting

Reconciliation

Almost all these applications have a different approach to reconciliation. Basically, you import your bank or credit card statement to the application and then match it to Income/Expense accounts. FreeAgent support says “If you’re uploading bank transactions and explaining them you don’t need to do a traditional bank reconciliation. A bank reconciliation just means agreeing the accounts back to the bank, and by uploading your transactions from the bank, you’ve done that already”. This does makes sense…

Outright – You can map expense and income items to categories. Remember, Outright does not have integrated invoicing/billing so reconciliation is not really an option anyway.

Xero – Xero is the true winner here. Matching and mapping are super easy and straight forward. I found it to be the closest to the traditional, QuickBooks-like reconciliation, in a much easier and intuitive way.

Wave – I found Wave’s matching system to be cumbersome. I could not map an item to an invoice payment that I received. You can split transactions.

FreeAgent – Matching interface is nice. You can split a transaction in to multiple items (ie if you deposited $10K to the bank which consists of multiple checks, you can map it to multiple invoices).

LessAccounting – Like Wave, LessAccounting’s reconciliation is a bit cumbersome. You can split transactions. I simply did not get how reconciliation works.

Kashoo – You cannot split a transaction in Kashoo. This is a deal breaker for me.

Winner – Xero

API

Wave – Does not have an API yet. According to the support page they are working on it…

Xero, FreeAgent, Kashoo, Outright, LessAccounting – They all have APIs. I have not taken an indepth look yet but all seem to support the functionality that I need – creating Invoices and Bills using the API.

Winner(s) – Xero, FreeAgent, Kashoo, Outright, LessAccounting (again, I have not individually reviewed the ease of integration)

Bank Account Integration

Outright, Xero, Wave, LessAccounting – Supports direct linking to financial institutions and also Paypal. You can also manually upload statements.

Kashoo – You cannot direct link institutions or Paypal, however, you can upload statements.

FreeAgent – Direct linking is only supported for Paypal. You can manually upload statements.

Winner(s) – Outright, Xero, Wave

Multi-currency Support

Xero, FreeAgent, Kashoo, Outright, Wave – support multi-currency transactions.

LessAccounting – you can pick the currency for an invoice but not for an expense. If your business operates in multiple currencies, you simply won’t be able to use LessAccounting.

Winner(s) – None

Sales tax Support

Outright – Taxes are only supported in Plus version. Since I am testing the free version, I was not able to review the options. According to the support page, plus version offers quarterly tax reports.

Xero – Complete support for sales tax. You can define multiple rates and map them to your accounts. Quarterly and yearly filing reports are available.

Wave –  Complete support for sales tax. You can define multiple rates and map them to your accounts. Quarterly and yearly filing reports are available.

FreeAgent – You can define multiple sales tax rates. You can also map them to your sales items. Quarterly and yearly filing reports are available.

LessAccounting – You can define multiple sales tax rates. Quarterly and yearly filing reports are available.

Kashoo – It has predefined tax settings based on the country. Quarterly and yearly filing reports are available.

Winner(s) – Xero, Wave, FreeAgent, Kashoo

Conclusion

My choice will be Xero at this point. I seriously consider Wave, however, I need to pass since there is no API for integration. I like the user interface of Xero the best and I felt home coming from years of QuickBooks. Also note that the business that I am considering is not freelance/individual. If you are a freelancer, your best bet is probably Outright or FreeAgent.

What about the cost?

I did not include cost in my comparison to be fair. Sure, Outright offers the most for free but it lacks “must have” features for me. Bookkeeping and accounting are serious matters and price cannot be the deciding factor unless everything else is equal. Of all the systems I reviewed, Wave Accounting is the only completely free solution.

Please share your experience with any of these or other accounting packages…

Update: We have completed the switch to Xero and I posted a 2 month review for Xero Accounting.

Categories: Product Reviews.

Comment Feed

40 Responses

  1. Hi, Thanks for writing about Wave-glad to see we’ve piqued your interest. We’re looking forward to including an API integration, and hope you’ll check back in with Wave when we do!

    Though I know you wanted to make sure not to incude price for fairness to product rather than price sensitivity, I wanted to add that Wave Accounting is 100% free (all of our features, permanently free). It isn’t a product attribute-but it’s still an important aspect of Wave Accounting (and we think a pretty awesome aspect).

    Thanks again for writing about us!

    • Sara,

      I am trying to test drive wave accounting. It looks all fine to me so far as a startup company in China. By a few hours on it, I have two questions.

      1. Can you allow user to create chart of account.

      I am in logistics biz mostly and I wish I can create a set of chart of account to record income and expenses in a more industrial based level.
      Besides, local authorities also have standard request about how to conduct book keeping, if you can open that function, it would be great.

      2. I run google apps, and there are multiple domain in one set of google app. I found only primary domain user can be added as collaborator. However, the guest collaborator does not allow me to add users from other domain, saying it is google app user already. I think it is something we needed it badly, as there are user under non-primery domain is also part of organization.

      Thank you,
      [email protected]

      • Thanks for your question!

        Right now we are not supporting languages which is why the PDF invoice will not display Chinese characters if this is what you you are asking.

        You will not be able to rename the categories that were provided. However, you can add new custom categories.

        1. Here’s how you can add custom business categories:

        a. Go to “Settings” -> “Accounts”.
        b. Click on the “Add an account” button.
        c. Click on the “Income” or “Expenses” tab.
        d. Search for “custom” or “other”. If a category has the name “custom” or “other”, you should be able to rename it (but you won’t be able to rename “Other Expenses”).

        We are going to be working on ways so this can be more transparent and straight-forward.

        2. At this time we are only supporting one domain per business. However, they can still be invited as a regular “Guest Collaborator”. To accomplish this, go to “Settings” -> “Guest Collaborators”.

        Since they are a regular Guest Collaborator, they will not be able to access the business using the “Wave Accounting” link on their Google Apps domain. They will need to sign-in using this page: https://app.waveaccounting.com/accounts/login/

        All the best!

  2. Aw, you left out LessAccounting.com! If you’re interested in giving us a spin (for free, of course) shoot me an email (I’m leaving it in the contact field below.) Thanks!

  3. Great to see QuickBooks users taking a look at online options – the power of being connected to other users and advisors and services will change your life!

  4. Hey Emre, thanks for reviewing FreeAgent and for the feedback especially on the invoicing process.

    As our name suggests, we’ve crafted FreeAgent to be more suitable for the freelancer than perhaps your business situation, so we have more in common with Outright in terms of target market.

    Also just to let you know: direct bank feeds are very much in the pipeline

  5. Hi Emre,

    I have spent much of my spare time today going through the exercise you just described in your post. 🙂 I came to a similar conclusion and I am glad I am in good company. I looked up Globalme and booked marked it under (mysitearound the world) and I will look you up when I am looking to translate my Nursing Exam Prep content into other languages!!

    Thank you for your thoughtful and well written post.

    Jenna Verenka RN (EC), MN
    CEO Frontline-Education
    http://www.frontline-education.ca

  6. Hi Emre and thanks for your review comments. I’ve singes up with Wave, but I’m not sure if it’s capable of project expense tracking. I’m a developer and need to track projects. If Wave can’t do that, do you know any other web based accounting program that can? Thanks.

    • Roshy, Wave does support expense tracking however I am not sure how extensive the features are. If you are running a single person business, definitely check FreeAgent and Outright as those are more geared towards freelancers.

  7. I am currently evaluating Wave. Its quite cool interface. However, I do miss multilingual support. German language would be nice-to-have. And support for European banks could be better, Swiss banks like ZKB missing.

    • I agree, Samuli. Per the feedback I received from Wave, they do not have any plans for multilingual support for now. Hopefully they will consider it soon…

  8. does the application work for a non profit?
    Are you able to rename a chart of accounts?
    If not, how can this objection be overcome in using wav”s system?

    • Hello Bob,

      I think you could use any of these for a non-profit. I know that in Xero you can rename the Chat of Accounts but not sure about the others…

  9. Just my experience FreeAgent does not support multi-currency – at least it doesnt work for me. I tried to import a paypal account and all the international currency items appeared in GBP :/ – have not seen any option to change.
    There is an option to pay extra for Paypal automatic importing that supposedly fixes this, but I have no tried this option as I do not wish to pay extra.

    • Roman, my experience with Xero’s multi-currency has been positive so far. We have USD and CAD transactions in our Paypal account. Xero requires that you add two bank accounts for this, Paypal CAD and Paypal USD. It then downloads those transactions accordingly and it has been working well for us so far.

  10. How do you guys manage to use Wave? – I tried to connect to HSBC UK- Business, HSBC UK – Personal, Barclays UK Business and CapitalOne UK and none of them work. To add insult to injury it wont accept any CSV bank statements or the QIF bank statements you get from HSBC.

    I am basically stuck with an empty screen because I cant find any way to import any type of UK statements 🙁

    • Same here, I have been trying to sync with CIBC (a canadian bank), but it won’t, and the error messages are pretty useless. Unless I get some help, I guess Xero is the default choice for me.

      Thanks for the great review!

    • Oh, have had you any luck Roman. I managed to use Wave with Santander UK no problems at all! Was quick to do, 5 mins tops!

      • My brother had the same problem with Wave.

        This doesn’t solve the problem, but you can actually manually add an account. You go to settings, then accounts, then add account, and so on.

        You can then click on imported transactions, scroll down to the bottom, and click on the link to upload a bank statement. It will take Microsoft Money (.OFX), QuickBooks (.QBO), Quicken (.QFX), or Simply Accounting (.ASO).

        It wasn’t easy for me to figure this out, especially since Wave doesn’t show your new account in its dashboards with other bank accounts or credit cards. I haven’t tested it, but I would assume that it would all work.

  11. I have been a user of Xero for years. My only frustration at this time (early 2012) is that it still doesn’t work with my bank feeds (Desjardins) and that it is not multilingual. But other then that, it is perfect and … FUN to use.I have worked around the not multilingual by editing the pdf invoices in a pdf editor. The fact that the accounting itself is in English only is not a problem. I only need the invoices to my customers to be in a different language. I am going to benchtest Wave because it is free. But if they to don’t support bank feeds for Desjardins and have no plans to support multilingual, I’m not sure if in the end it will be worth switching. Rebuilding the chart of accounts to my needs, reentering the customers, the sale items, etc. is time consuming.
    A BIG thank you for your reviews. It was very helpfull. These products are developping fast, each time I check the web, there is a new player. I am interested in providing good solutions for my customers – mostly non-profit organizations – and do have to keep an eye open to see how any of them could be the next best choice. Thanks again.

  12. I’m considering using Wave for my sole proprietor physiotherapy practice. My accountant is skeptical and suggests I use Account Edge (I have a Mac). I’m new to book keeping and Wave seems like it will be easy to use, and I don’t think $500 or so for an accounting program is necessary at this point (or ever?). Any comments?

    • I would say $500 is very steep and excessive for a start-up, Marilyn. Not that I suggest, but even if you went for the traditional QuickBooks route, you’d be done with $199. I definitely recommend you stay away from falling in to the “let me use Excel at the beginning” trap. So do use an accounting system but try not paying a lot for it(if at all). If I were you, I would start using 2-3 free or low cost online systems and enter my transactions to all 3 of them. This will lead to an organic decision.

      Before we switched to Xero at Globalme, we used the same version of QuickBooks for 4 years with no major complaints (and that is not bad at one time $139 cost).

      Good luck with the business! Please do come back and share your experience.

  13. This is a great post. I used Wave for my small biz in 2011, but found that their bank feeds were unstable. I basically lost a bunch of my data and has to manually input info to get back on track. Because of this, I’ve decided to switch to a different service. So now I am trying out Indinero, Xero, and LessAccounting. Jury is still out on which we’ll end up using for good. Thanks!!

  14. Emre – this is a fabulous comparison for us non-accountant types, thank you much! I’m partnering in a new venture, and will need to import Paypal payments and designate them to specific revenue categories. Also, some of our customers may prefer an actual snail-mailed invoice. It seems that Wave would be a great option for a startup – will it handle our specific requirements? Again, thank you for the reviews!

  15. Wave is great, but i agree with JT as far as stability of the feeds are concerned. also the automatic integration gets messed if i change my netbanking password.

  16. Hi, I am using Wave accounting, and trying Expensify, Lemon. I am considering also to try Xero, Fresh books and maybe Quick books. Here is what I think of all them:

    Wave Accounting is free and free is cheap and cool. Although I can’t import my bank account from Italy or Norway, I can’t have more than one business account and I can’t connect is with an expenses apps like expensify

    Expensify seems good to scan receipt but you can only scans 10 per month free so I need to use another app like Lemon. It can connects with bookeeping apps like quick books, fresh books but I need to pay for them around $200 per year.

    Lemon is cool and easy to scan receipt but there is no business feature yet so it’s only for personal reason.

    I will try Fresh and Quick books and Xero and I will let you know.

  17. I agree. Just started using outright as program I use for service scheduling has invoicing. I also have had major issues with Wave as far as duplicate and missing transactions that occur randomly.

  18. I thought this post was great, but I am surprised that mobile access was not tested. One of my major problems with Quickbooks online was that it has no mobile access. The iPad app is for review only and you cannot use Safari (or any other iPad browser for that matter).

    Any help here?

    Donald NobleApril 30, 2012 @ 11:47 pmReply
  19. We are a design firm who uses Xero in Australia. Have tried most of the alternatives you listed but just can not go past the simplicity and joy of using Xero. We import PayPal accounts, ING savings accounts and two other accounts, reconciliation is a joy and payroll integration should be completed in the next few weeks.

    Thoroughly recommended!

  20. Hi everyone,

    I just wonder how this waveaccounting company get it’s income? Just to be sure that my company’s accounting records does not disappear suddenly because of them shutting down the service. Can I export the information in it? as backup/exit strategy.

  21. Thanks for the great info, i have been using quick books for 3 years and am frustrated at its lack of integration for mac and mobile and paypal. I am now looking at Xero and some of the other ones you mention. I suppose it would be easiet for me to Xero as its close to QB/s and i am sued to reconciling each month, although if there is a smarter faster way to do bookkeeping then I am in!
    I am a sole proprietor in a Life coaching business, I am curious why you think that for ‘freelancers’ they should use Freeagent or Outright, can you share with me your reason for that recommendation?

    • Diane, if you are coming from QB, Xero will feel like home. My suggestion of Freeagent/Outright was mostly because these systems are geared toward freelancers and getting started may be a little easier for someone who is new to book keeping. Plus these two are a bit cheaper than Xero…

  22. According to this review — http://www.smallbusinessdoer.com/kashoo-review/ — you CAN split transactions in Kashoo.

  23. This is a very helpful review which I’ve referred to several times, so thank you Emre!

    You mention that FreeAgent supports multiple currencies, as does their website. But after creating a trial account, uploading a couple bank statements, and learning the interface, I found that FreeAgent is “multi-currency” only in that you can select which currency you want ALL your accounts to report in. You can’t track bank accounts in one country/currency with transactions in another country/currency, as I need to be able to do.

    What a disappointment…I was thinking I’d FINALLY found the accounting solution I need.

    • Sorry to hear that, Curtis. I have been happy with Xero’s multi currency support. The only limitation is you cannot batch pay multiple invoices if they are in a foreign currency.

  24. Hello Emre so nice of you to be the resident expert for all of ‘us!’ I will be running multiple preal estate roperties and need individual p&l functions ap and ar as well as a consolidation feature, with emphasis on cash flow tracking across 7+ income properties. I need a set up from scratch and was wondering if you had some thoughts if you have a moment?? Many thanks!! Jan

    • Jan, I do not have any experience in real estate domain but I think Wave or Xero should work for you. We have been happy with Xero at Globalme and I also use Wave for another business that I am running. Both are great applications, Xero is a bit more mature and a better fit if you work with a lot of vendors, employees etc. in my opinion.



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