Wave vs Xero
Free small-business accounting vs the powerful platform accountants love.
Wave offers free accounting that's surprisingly capable, while Xero charges a premium for an accounting platform that scales from freelancers to mid-size businesses. If you're outgrowing spreadsheets and wondering whether to start with free or invest in a platform you won't outgrow, this comparison will help you decide.
Wave
Free accounting and invoicing for small businesses
Advantages
- Completely free accounting, invoicing, and receipt scanning
- True double-entry accounting without the price tag
- Clean interface accessible to non-accountants
- Unlimited invoices and bank connections
Drawbacks
- Limited integrations with third-party business tools
- No inventory management or project tracking
- Customer support is limited without the paid plan
- Multi-currency support is basic compared to Xero
- Lacks scalability for growing businesses with complex needs
Xero
Beautiful accounting software
Advantages
- Powerful multi-currency support ideal for international businesses
- 1,000+ third-party integrations including inventory, CRM, and project tools
- Accountant-friendly with advisor dashboard and multi-org management
- Scales from freelancer to 100+ employee businesses without switching platforms
- Excellent bank reconciliation and automatic transaction matching
Drawbacks
- Monthly fee starts at $15 and scales to $78 for the top tier
- Payroll available only in select countries
- Learning curve is steeper than Wave or FreshBooks
- Starter plan limits invoices and bills to 20/month
Feature Comparison
| Feature | Wave | Xero |
|---|---|---|
| Monthly Cost | Free | $15/mo (Starter) to $78/mo (Established) |
| Invoicing | Unlimited, customizable | Unlimited on Growing and Established plans |
| Bank Feeds & Reconciliation | Automatic bank connections | Automatic with smart transaction matching |
| Multi-Currency Support | Basic support | Full multi-currency with auto exchange rates |
| Inventory Management | Not available | Built-in inventory tracking on higher plans |
| Third-Party Integrations | Limited -- Zapier for some connections | 1,000+ apps in Xero App Marketplace |
| Reporting & Analytics | Standard financial reports | Advanced -- custom reports, budgeting, forecasting |
| Business Scalability | Best for micro and small businesses | Freelancer to mid-size enterprise |
Xero Wins
Xero wins for any business that plans to grow because its integration ecosystem, multi-currency support, and scalability far outpace what Wave can offer.
Wave is an excellent starting point, and there's zero shame in running your business on free software. But most businesses that start on Wave eventually outgrow it and need to migrate to a paid platform -- and that migration costs time and effort. Xero's integration marketplace alone makes it worth the $42/mo Growing plan for most small businesses: you can connect your POS, inventory, CRM, project management, and payroll in ways Wave simply can't. If you know you'll stay small (solo freelancer, side business), Wave is genuinely the right call. For anything with growth ambitions, invest in Xero from the start.