Xero vs Wave: Which Should I Use?

Startup owner deciding whether she should use Xero or Wave?
Startup owner deciding whether she should use Xero or Wave. (Photo by Magnet.me on Unsplash)

Xero and Wave are both wildly popular accounting software used by startups, small businesses, and medium-sized businesses. They are used for business accounting and tax filing. Although the two systems have great reviews and excel in their niche, they are not the same nor interchangeable. 

If you are deciding which software would work best for you, consider the pros and cons of both. Moreover, despite their great track record, if their cons are in areas where you need a lot of support, or that are critical to your operations, you may be better off expanding your market research to other accounting products. 

Let’s look at how the two products compare with one another.


Person scrolling through user-friendl;y apps.
Person scrolling through user-friendly apps on a tablet. (Photo by Taras Shypka on Unsplash)


Xero has an attractive user interface (UI) and lots of features that make it easy for business owners and/or their accountants to compile financial data, organize it, create reports using it, and file mandatory industry and government documents with it. 

The problem is that this software has advanced accounting features and incredibly limited online resources for its users.  So, it is difficult for people with no accounting software experience to navigate the platform and learn how to effectively and efficiently use it. Hence, there is a moderate learning curve that must be scaled before the user can get anything done using the software. 


Wave is accounting software that performs basic accounting functions and is ideal for businesses that don’t have inventory, no depreciable assets, and doesn’t require anything more than basic accounting. Wave is extremely user-friendly and can be quickly learned, mastered, and used to perform basic accounting tasks. Moreover, the software can be used for accounting and tax filing purposes. The tax filing benefits are that Wave has a partnership with H&R Block that makes it easy for businesses to pay H&R Block to do their end-of-year taxes.

Level of Sophistication


Xero is cloud-based software that can be used to organize and analyze a large variety of data (inventory, time spent on sales, invoices, collection times, penalties charged for late payments). In addition, it can use that information to generate over 50 different types of financial reports. These financial reports not only compare different types of business accounts, expenses, and assets, but can be used to make projections and evaluate what-if scenarios. 

These advanced features are perfect for sophisticated business operations, manufacturing businesses, and product-based companies. Its more sophisticated features include inventory tracking, evaluation of product sales performance, calculation of COGS, depreciation, and the consolidation of a business’ varied activities into the accounting reports and statements. 


Wave is ideal software for business owners who are new to business, accounting, and/or for people who have no experience using accounting software. It is quick and easy to learn because it only performs basic accounting functions and generates the basic financial reports and statements (e.g., income, profit and loss, liabilities and equity). 

It is great for ecommerce businesses (e.g., eBay, Amazon, Etsy), but when the business must account for non-basic accounting features it may need to change software systems. Furthermore, if the business expands its operations or needs to generate more complex financial statements, that work will have to be outsourced, or the accounting software used must be changed to one that is more sophisticated (e.g., Xero). 


Xero and Wave have some common features. However, Xero surpasses Wave when it comes to offering sophisticated accounting features that may be needed by medium-sized and large businesses. 

To make it easier to understand the significant discrepancy between the two types of software, their features are listed in the chart below.

Accounting Software Features
Xero Bank reconciliation, budgeting, customizable dashboard, creates invoices and quotes, financial statements, (e.g., profit and loss, cash flow, balance sheet), inventory management, accounts payable, expense tracking, time tracking, fixed cost asset management, expense claims, evaluate product sales performance, calculate COGS, calculate depreciation costs, sales tax accounting, track fixed assets, track disposal of assets, create and view 55 different kinds of reports, creates and sends recurring invoices, creates and sends recurring statements, API available for developers
Wave Invoicing, contact management, expense tracking, inventory management, accounts payable, sales tax accounting, API available for developers, financial reports (max 12), e-commerce checkouts tool (creates a multiple checkout link that can be sent via email, text message, or posted on a website; the link allows customers to pay the company by clicking on the link and lets the company bill multiple clients at the same time without creating separate invoices) 


Mobile Apps

Person looking at apps on a mobile phone.
Person looking at apps on a mobile phone. (Photo by Yura Fresh on Unsplash)
Software App Mobile Apps
Xero (iOS and Android) Xero Accounting, Xero Expenses, Xero Projects
Wave App lets users create invoices and accept payments using their mobile phone



Xero integrates with 173 different apps. It can be used to manage third-party platforms (e.g., Amazon, eBay, AliExpress) too. Besides being able to independently integrate different apps, it works well with Zapier which gives it access to dozens more apps (via Zapier).  


Wave integrates with 73 different apps. It can also be used with Zapier, so that the platform user has access to even more apps. 


Customer Support

Man providing customer service.
SaaS customer service support representative. (Photo by Berkeley Communications on Unsplash)

Xero and Wave

Both software apps are criticized for their less than stellar customer service and online resources. Neither is a good choice for businesses that need lots of customer supporter online resources to help them navigate the app. They both provide customer support via email (usually takes about 1 day to get a reply), video tutorials, social media forums (e.g., Twitter, Facebook. LinkedIn), and some online publications. 

Note, if customers pay for specialized services from Xero and Wave they can get better customer service when using that particular service. For example, with Wave’s payroll or credit card processing programs, Wave users can get assistance via chat and phone from the niche service’s customer service department 

Software App Customer Support
Xero No phone support available

Contact via email (about 1 day to get a response)

Xero Central Help Center

Video tutorials



Xero University training program

Xero social media forums (e.g., Twitter, Facebook)

Wave Contact via email

Help Center

Wave Community Forum

Social media forums (e.g., Twitter, Facebook, LinkedIn)

Platforms Supported

Xero and Wave

Both apps support the same platforms: web-based, iOS, and Android. 


Picture of blank price tag.
What are the subscription fees? (Photo by Miguel Á. Padriñán on Pexels) 

The key difference between Xero and Wave is that Wave is free. Xero requires its subscribers to pay a monthly subscription fee. Note, only Wave’s basic services are free. If you want any type of specialized services from Wave, you will have to pay a fee for them.  

Software App Pricing
Xero Early: $12/month (5 bills and 20 invoices)

Growing: $34/month (unlimited bills and invoices)

Established: $65/month (multiple-currencies and project tracking)

Payroll Processing with Gusto: $39/month + $6 per employee

Works with 3rd party payment processors PayPal, Stripe, and GoCardless.Each payment processor charges fees for its services.

Wave Free

Payroll Processing: 

$35/month + $4 per employee  (full-service managed payroll)

$20/month +$4 per employee (self-service)

Credit Payments (most): 2.9% + $0.30 per transaction

AMEX Card PaymentL 3.4% + $0.30 per transaction

Bank Payments: 1% per transaction,minimum payment US$1.00


Xero and Wave both have the following features:

  • Invoicing
  • Contact management
  • Expense tracking
  • Inventory management
  • Accounts payable
  • Financial reports (XERO has 50 more different kinds of reports than Wave)
  • Limited free trial
  • Subscription based
  • Not good if you want to easily access local bookkeepers and tax accountants
  • Support the same platforms
  • Usable by freelancers and small businesses
  • Must pay fees to use 3rd-party payment processors
  • API available for developers


Xero and Wave

Both software apps have poor customer service, are not good at consolidating financial records from different businesses, and make it difficult to outsource your accounting needs to local bookkeepers.

Xero or Wave: Which is better?

Man thinking about which accounting software is better for his buisiness.
Man thinking about which accounting software is better for his buisiness. (Photo by Mizuno K. on Pexels) 

Xero can be used by freelancers, small businesses, medium-sized businesses, and large enterprises. It has sophisticated accounting features that allows these businesses to perform basic accounting and sophisticated accounting functions. It has a moderate learning curve. Some time and effort must be invested to learn it. After you are familiar with  the software, it is easy to navigate. With Xero, your organization can grow without changing accounting software.

Wave’s simpler and more basic accounting software is very user=friendly, has no learning curve, is easy for people with no accounting software experience to use, and produces the financial reports that a simple business needs. As a business becomes more sophisticated or moves into manufacturing, it will most likely have to change accounting software. 

Overall, Wave is better for budget-conscious businesses that are simple and only have basic accounting needs. Besides being free, it is intuitive, and user-friendly. Unfortunately, it’s  not scalable. You may need to change accounting software if your business changes and needs more sophisticated accounting functions.

Xero is the better of the two if you have a manufacturing or production-based business, growing enterprise, or need sophisticated accounting work done. It supports an unlimited number of users, has over a hundred integrations, 3 mobile apps, a large variety of financial report templates, and is great for project management.

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