WAVE’s business model is a little different than most online accounting packages. Firstly the core software is free. So there’s none of the nonsense about a so-called “free trial”.
When it comes to accounting software the term “free trial” is just advertising hyperbole. In the same class as “financial statements at the push of a button”. Consider how much work it is to put a package thought its paces.
How much data do you need to enter in order to put the software to a meaningful test? Is that really free if you have to pay someone on your staff to enter and interpret the data? How many packages do you want to take for a test drive.
So if WAVE is actually free, how do they make money?
So WAVE likely makes most of its money on transaction processing. When you create an invoice in WAVE you can allow clients to pay online with credit cards or PayPal. They also charge for payroll and offer monthly bookkeeping services.
While we find it useful in our practice to accelerate cash receipts, you can obviously choose to simply create PDF invoices and email them to clients – and save the processing fee.
While we haven’t tried the payroll service, we typically recommend other options for payroll processing.
From our perspective we think these services are rather expensive. Of course we compete with WAVE in providing bookkeeping services, but think prospective clients should get nervous when someone says services start at $199 per month (look for our upcoming post on bookkeeping services).
We also think it’s a little disingenuous to suggest that someone can learn how to do the bookkeeping after 2 hours of training. A few days ago I did some work on a file where the CFO (a talented guy who had raised millions for the company) made some adjustments directly in the accounting software for transactions that were “too complex” for the bookkeeper.
The total revenue for the year was about $12 million. After he had finished, it was clear that revenue was overstated by $1.4 million because of his adjustments. Unfortunately he was too focused on the revenue number and didn’t quite understand the importance of the relationship with the assets on the balance sheet.
The number for one line of revenue was now correct, however a second line was overstated by $1.4 million because of a bookkeeping error. At the same time there was a “phantom” (non-existent) asset in the amount of – $1.4 million.
The takeaway is that being intelligent and well-educated isn’t a substitute for training AND experience in accounting.
Like I said, the CFO is a talented guy and does wonders when it comes to corporate finance. But he shouldn’t fool himself that he can do the bookkeeping – even if he can read the financial statements and is very “financially literate”.
For the majority of corporations with 5 or fewer employees, WAVE does a perfectly adequate job of serving as an online general ledger and financial reporting tool. It supports multiple currencies pretty seamlessly and allows bank accounts to be linked directly to your bank.
This sounds wonderfully “Artificially Intelligent” – and certainly linking the bank account to your general ledger can be a real time saver for a skilled bookkeeper. However, it can also create a real mess, really fast if you’re not experienced.
to the unskilled, “automatic” bank feeds can actually create a false expectation of accuracy
In fact we often get clients to download “CSV” (comma separated value) files from the bank at the end of the month – or whenever they need financial statements. We then import them into the software whenever we need to prepare the statements.
The notion of a direct feed from the bank, leads many people to assume that accurate financials can be printed at any time. This is almost always dangerously false – particularly when the people trying to interpret the financials are unskilled.