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:
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
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
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
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
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.