It would be great to set up a business as cash and not accrual accounting from the beginning, rather than having to follow cash-based accounting workarounds. It would make a real difference in my day to day to be able to do this.
I agree, many small businesses where I am located use cash based accounting primarily or only and it's tricky to have to switch back and forth. It also doesn't play nicely with accountants.
In the new version of waveapps there's a cash-based report that basically resolves this headache. Ultimately, I'd like to see more thinking/insights geared towards cash accounting, but this is a start!
If I had realized before setting up my accounting in Wave that it could not handle cash based accounting (which surely is the norm for Wave's target market of small businesses), then I probably would not have used the product. As it is I will use if this year (2018) but probably migrate in time for 2019 to a product that can handle cash based accounting. There may be workarounds but a workaround is usually clumsy and never a satisfactory long term solution.
Gerry: where is this report? I dont see it.
Wave: This is an incredible oversight. I would guess that around half or more of small business are cash based. Most of these users dont have a clue about journal transactions (I know I dont). Ideas:
1. Changing reports from "Invoiced_Date" to "Paid_Date" and similar for expenses should be a good first step, or maybe all that is necessary,
2. Provide a shortcut that will auto generate the journal entries
Another year of this and I'll be looking for a new service as well. I guess QB might get another customer.
So Wave uses accrual accounting because it makes for more accurate depiction of a company's finances. Although cash-based accounting can make a business' cashflow a little easier to follow, it doesn't do as well a job matching incomes to expenses. It also isn't as practical for business' that set their invoice's due dates later than their invoice dates.
We do have a few reports in the newer version of Wave that will make going from one type of accounting to the other much easier. The Account Transactions report allows you to choose cash-basis, and the Cashflow report is calculated on a cash basis. If you don't have access to those reports yet, it shouldn't be much longer. We've been migrating our new users to the new interface in waves, no pun intended, as the resources become available.
There's also a bit more information on workarounds for cash-based businesses using Wave here.
Workarounds are a joke. Yes, most small businesses are cash based accounting. I just uploaded my bank records and learned this. It's a no brainer NOT to use wave after learning this.
This is really stupid on waves part. They are targeting a market and don't use the method their primary market is using!
Didn't realize that Wave was not cash-based until invoices were setup, employees were added to payroll and I reconciled 4 months of transactions. Should have trusted my gut and used Quickbooks from the start. Bye!
Because I am in the UK and running as a ltd company, I am required to use accrual accounting.
But I still have to figure out how it works in Wave.
Wave uses accrual accounting as a baseline. You won't have to figure anything out at all!