African users of Wave bracing for post-exit scenario
Wave Accounting, a Toronto-based company that provides free invoicing and accounting software, has announced that it will be pulling out from all countries outside North America. This decision has sparked conversations about the lack of suitable alternatives for African entrepreneurs, who have grown fond of Wave Accounting, particularly freelancers and small business owners.
Founded in 2009, Wave Accounting has amassed over 3.5 million users worldwide. It gained popularity in Africa due to its user-friendly interface and free services. However, the company was acquired by H&R Block in 2019, and recent developments suggest a shift in focus towards paying customers in North America.
This regional focus might impact the overall usability and service quality for African businesses. Users may face limitations such as restricted support, features adapted to North American markets, and potentially less optimized payment processing or banking integrations for African users.
Wave Accounting's co-founder and CEO, Kirk Simpson, cited increased resources required to support the software and new legislations as reasons for this change. The company will continue to support current customers in Africa and other parts of the world, but no new accounts can be created outside North America.
Africa, with an estimated population of over 1.3 billion people, has 90% of businesses classified as Small and Medium-sized Enterprises (SMEs). Many African SMEs/startups face funding challenges, and understanding their financial performance is crucial for ascertaining funding needs. The absence of suitable alternatives to Wave Accounting could mean that many African entrepreneurs who dislike managing their finances may return to manual or no bookkeeping.
A survey on local entrepreneurs in South Africa found that many practice manual bookkeeping and do not complete the bookkeeping cycle, with incomplete financial records often serving as the basis for business decisions. This situation underscores the need for accessible and efficient accounting software in Africa.
The exit of Wave Accounting has also sparked discussions about alternatives built by Africans. Examples include Oze, Tuaneka, Built Accounting from Ghana, OnePlusOneAfrica from South Africa, Paper cloud, and Accounteer from Nigeria. These homegrown solutions could potentially fill the gap left by Wave Accounting, providing African entrepreneurs with the financial management tools they need to thrive.
Meanwhile, Zoho Books, a cloud-based accounting software, has partnered with Wave Accounting to provide a special offer for transitioning customers. Zoho Books' lowest plan costs $9 per month, unlike Wave which is free. However, the cost may be a barrier for some African entrepreneurs who are accustomed to Wave's free services.
Wave Accounting makes money from a minority of its users who use its additional payroll function (only available in US & Canada) and Wave Money, a bank account with built-in bookkeeping. As Wave Accounting focuses on North America, it remains to be seen how this will affect its revenue model and the services it offers to its users worldwide.
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