Most SMEs use cloud accounting software to help reduce the time, costs, and stress of accounting. At Vanilla Accounting, we are often asked whether it is worth investing in a subscription-based software platform such as Xero, or whether a free package such as Wave will suffice. The answer is personal, but here’s how they stand side-by-side.
Functions
Xero offers the full range of accounting functions. These include all the essentials, such as payroll, inventory management, payroll management, expense tracking, and invoice management. However, crucially, it also offers a host of additional tools that include project management, which can plan, monitor, and automate project expenses to save you time and money.
Wave offers a more basic range of accounting functions. These represent the core tasks that SMEs need to complete, as well as a few additional extras such as expense tracking and automated reconciliation. However, as a free-to-use platform, this is where the software begins and ends.
Usability
Once you are familiar with the software, Xero has high levels of usability. However, it is so comprehensive that learning to optimise it can take time and effort. Rather than going it alone, many smaller companies prefer to partner with a professional accountant who is a Xero expert, as this is usually the most cost-effective implementation strategy. As a much simpler piece of software, Wave was designed with usability in mind for solo contractors and micro-businesses. Like Xero, Wave still requires time to get used to. However, it has fewer functions, and is therefore much easier to learn.
Collaboration And Accessibility
With 4.2 million subscribers, Xero is the most popular accounting software for SMEs. As such, collaboration is central to its architecture. For instance, when using Xero’s project management tools, it enables you to collaborate easily with stakeholders, suppliers, and customers. Wave is more focused on managing your in-house accounting and financial reporting. As such, third party collaboration is not such a major part of its model. However, many accountants will be happy to support you with Wave.
Security
With its multi-user capacity, real-time professional feedback, and remote access capabilities, security is something that Xero takes incredibly seriously. It has ISO 27001 (Information security) compliance, PCI DSS v4.0 SAQ A compliance, and produces regular SOC2 security assurance audits. This formidable portfolio is in response to the multiple layers of protection and encryption that Xero places around its software.
Wave has fewer security barriers in place. However, its Level 1 PCI-DSS certification demonstrates that third party auditors are satisfied with its cybersecurity. This includes the standard package of 256-bit encryption and read-only connections.
What Next?
Whether you opt for Xero or Wave, having the right accountancy software can help to increase your organisational agility and resilience. For professional advice about which is more appropriate for your business, please call 0115 647 4547 or get in touch today to speak with one of our SME accounting team.
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