FreshBooks vs Wave: The Battle for Beginners Is On in 2020
FreshBooks and Wave are among the best accounting software, so small businesses should consider the user-friendly, cloud-based programs when they’re shopping around. That said, both will fulfill the core bookkeeping needs of any business — invoicing and bill payment — so it’s necessary to look deeper to identify their differences and choose between them.
For an in-depth look at each, we suggest you read our FreshBooks review and our Wave review.
1. Invoicing
Collecting on monies owed is central to any business’s survival. Many small businesses first turn to a cloud-based accounting solution because they know they need to better staying on top of and tracking accounts receivable. It’s the one function you’re guaranteed to find in every accounting software program. The chart below compares FreshBooks’s and Wave’s invoicing options.
| Services: | FreshBooks | Wave |
|---|---|---|
| Send recurring invoices | ||
| Automatically add late fees | ||
| Send payment reminders | ||
| Integrate with inventory | ||
| Bill for hours worked | ||
| Customize invoices | (not many options) | (not many options) |
FreshBooks gives users a comprehensive invoicing system. Its invoices are clearly laid out, with common fields such as customer, quantity and notes. After setting up an invoice, you can select how often you want to send payment reminders for past due invoices. FreshBooks is unique in the marketplace in that it lets you customize payment reminders and late fees by client.
Many businesses bill for the same services each month. FreshBooks “make recurring” feature appears after every invoice you enter and save or you can select it when inputting an invoice. The time-saving function also ensures that your clients get billed, even if your bookkeeper calls in sick or forgets.
Wave has the ability to set up recurring bills, too, and gives you more payment reminder options. There is no way to add late fees to an invoice automatically like you can in FreshBooks, though. In Wave, you have to add a new line item to an existing invoice if you want to charge a late fee.
In FreshBooks, hours worked on a client’s project get pulled in to invoices. The service includes a projects function, which Wave doesn’t have. Creative and project-based businesses should take a deeper look at FreshBooks when determining their accounting software needs.
FreshBooks has a basic inventory system, unless you purchase an app, but you can select from items on hand when creating an invoice. Wave doesn’t include inventory options, but if you need to track quantities on hand and manage significant inventory, we suggest you check out Xero. If you’re curious, you can read our review of FreshBooks vs Xero.
Though customization options for invoices exist in FreshBooks and Wave, they’re limited. Options you can customize include colors, fonts and layout. Wave has three invoice templates you can add a logo to, while FreshBooks provides more templates and includes estimates and proposals.
Sending an invoice is only the first step. While both will send automatic payment reminders to customers who are overdue, it’s still a good idea for business owners to keep an eye on cash flow.
Outstanding revenue appears at the very top of FreshBooks’ main dashboard. It displays the total amount due in red as a visual reminder of unpaid invoices. In its “advanced reports” section, you’ll find an accounts aging report, which breaks out past due receivables by the length of time you’ve been owed.
Wave’s dashboard also presents invoices that you’re owed, but you have to scroll down to find the information. That said, its “invoices” screen displays overdue invoices front and center. An accounts aging report is also included in its “reports” section.
For invoicing, FreshBooks is superior to Wave. It includes more options, such as preparing estimates and proposals that convert to invoices, and more automated functions.
2. Bills
Paying bills is a necessary, if unpleasant, part of doing business. FreshBooks and Wave make it as painless as possible. Buttons on the main page take you directly to the form to enter a new expense.
In FreshBooks, the expense form lets you select the type of expense from a drop-down menu. You can upload and attach a receipt, if needed, and mark it as billable if a customer owes reimbursement. The service gives you the option to store a credit card on file and use it to pay bills, too.
The “make recurring” option appears on every new expense form. If you pay the same expenses monthly, such as rent or a utility payment, auto-payments save time and ensure that you never incur a late fee because you missed an important bill. After selecting how often it should be paid and how many times, you can forget about it.
Though it’s easy to find and complete an expense form in Wave, you’ll have to take the additional step of clicking “create bill” if you go through “purchases” and “bills” in the main navigation menu.
Wave doesn’t let users set up recurring bill payments and doesn’t keep a credit card on file.
On Wave’s expense form, you can assign numbers, type notes and attach receipts, but you can’t add a line for taxes.
Expenses that have been booked appear as a pie chart form on FreshBooks’s main dashboard. Wave shows overdue bills and invoices in a list to the left of its dashboard. Both have expense reports, so keeping track of money flowing out of your business isn’t difficult with them.
FreshBooks’s bill-paying features give you more options and functionality than Wave’s, with recurring payments and stored credit cards. It’s the clear winner in this category.
3. Reports
FreshBooks’s reports will never win when compared to those of other cloud-based accounting programs. It’s an odd area for the service to neglect, given its importance for making business decisions, but it only has nine reports.
The sole financial statement included in FreshBooks is the profit and loss. There is no balance sheet or cashflow statement. Banks and lenders typically request all three when you’re applying for a loan, so FreshBooks users would have to prepare the other two manually.
Wave provides users with the three major financial statements, as well as a much larger selection of reports related to other areas of your business.
Accounts aging reports calculate the amount of past due receivables by typical timeframes such as 0-30 days past due or 90-plus days past due, but Wave also has a report that displays income by customer. FreshBooks stops at the accounts aging report.
Wave’s additional reports cover sales tax, wages and payroll if you’re paying for its payroll functions. While it tracks sales and payroll taxes, you can’t file them online.
Neither service lets you customize your reports beyond selecting date ranges. That won’t be an issue for more straightforward businesses, but complex companies may want to change account groupings and displays. QuickBooks Online has the best report customization options.
Wave beats FreshBooks in this category, but neither will serve the needs of complex businesses or owners who look to reports to analyze and grow their businesses. If you need more, we suggest looking at QuickBooks Online. Our QuickBooks Online review outlines its pros and cons.
4. Pricing
No competitor is going to beat Wave’s pricing because it is free. It gives you all the features that we’ve discussed without charging a monthly fee. It does charge for payroll and merchant processing, though, and the company claims that enough from those to allow it to give users everything else.
FreshBooks follows the three-tiered monthly pricing plan that so many of its rivals use. The lowest monthly plan, Lite, lets five users access the program for $15 per month. The service’s basic functions are included, but it’s not until you pay $25 per month for the middle tier, Plus, that you can send payment reminders, charge late fees and schedule recurring expenses.
The top tier, Premium, costs $50 per month. It doesn’t add features, but allows up to 500 users to work with your account. While it’s unlikely that a business would have that many bookkeepers, it would be useful if you used the projects function heavily.
Wave charges fees for tax services, payroll and credit card processing. Payroll and tax services are only available in six states and cost $25 per month plus $4 per employee. For just payroll, it charges $20 per month plus $4 per employee.
FreshBooks doesn’t have an integrated payroll service. Instead, you’ll have to pay for an add-on, such as Gusto. If you’re looking for a program which does integrate payroll processing, we suggest reading our Xero review.
For a small business that needs to keeps costs under control, it’s worth it to sign up for Wave’s free service, even if you might have to deal with its drawbacks. That’s why it wins in this category.
5. User-Friendliness
It’s easy to find your way around FreshBooks and Wave. Menu items are clearly labeled and make sense. Buttons to “add new” items, such as invoices or bills, are prominently displayed. Steps to complete tasks are intuitive and don’t require much software experience.
FreshBooks does a lot to support its users. Links to relevant help articles, along with hints and tips, appear on main screens when you navigate to them for the first time. Customer support can be reached by email or phone.
Wave’s help section includes business guides, blog posts and videos. The “help” button always appears to the left on the menu. When you click on it, a box pops up that allows you to search the library without leaving the screen that you’re on.
We didn’t find much to differentiate between the companies in user-friendliness, so we’re calling this section a tie.
6. Advanced Functions
Though FreshBooks doesn’t offer complex inventory or fixed assets functions, it does include projects. Creative businesses that work on projects for their clients, or those that bill hourly, will find a lot to like in the feature.
When setting up a new project in FreshBooks, it’s easy to assign tasks and due dates to team members. Multiple people can be invited to contribute to the project, including external clients, but you can control their access.
Hourly billing on projects feeds in to invoices. If you’re sending an invoice to a customer for another item and they owe for hours outstanding, FreshBooks reminds you. If your employees bill at different hourly rates — a senior project manager versus a junior manager, for example — FreshBooks pulls that in to the project billing, as well.
Competitor Xero gives users inventory, fixed assets and projects capabilities. If you need all three, we suggest checking out our FreshBooks vs. Xero comparison.
The only way to manage projects, fixed assets or inventory in Wave is if you sign up and pay for an additional program that integrates with it.
7. The Verdict
The similarities between FreshBooks and Wave make it difficult to choose between them, but FreshBooks has a slight edge. It gives users more options in invoicing and billing, provides a projects function for service and creative businesses and is reasonably priced compared to other competitors.
That said, Wave’s reports give business owners more tracking and decision-making tools and its price can’t be beat. If you’re willing to manually enter recurring bills every month and want to cut costs, it’s worth a look.
As always, thank you for reading. If you’ve tried either program, what did you think? Did you have a preference? Let us know in the comments below.
Dena Landon has an MBA from Capella University and has been working as an accountant for over fifteen years. As tallying numbers all day can numb the mind a little, she has taken to writing in her spare time to indulge in flights of fancy (well, not too fancy). Her work has appeared in Good Housekeeping, Salon, The Washington Post and several other publications even more illustrious, though she feels right at home at CommQueR.com.