Streamline Your Business: A Beginner’s Guide to E-Invoicing in Malaysia

The Malaysian government is driving digital transformation across the country. The upcoming mandatory implementation of electronic invoicing (e-invoicing) is leading the way.  E-invoicing replaces sending traditional paper or PDF invoices. Invoice data is sent in an electronic format that integrates with other systems. This can mean significant benefits for businesses, including:

• Increased Efficiency: Manual processes are automated, saving time and resources.
• Reduced Costs: Printing, postage, storage and invoice processing expenses are eliminated.
• Improved Cash Flow: Faster and more secure invoice processing should mean quicker payments.
• Enhanced Accuracy: E-invoices cut errors associated with manual data entry.

Malaysia is adopting a phased approach to implementing e-invoicing. At the time of writing the implementation phases are:

• Phase 1 (August 1, 2024). Mandatory for businesses with annual revenue over RM100 million.
• Phase 2 (January 1, 2025). Mandatory for businesses with annual revenue between RM25 million and RM100 million.
• Phase 3 (July 1, 2025). Mandatory for all other businesses, regardless of their revenue.

This beginner’s guide will take you through the step-by-step process of implementing e-invoicing. We’ll explore the key factors to consider and options to ensure a smooth transition.

Step-by-Step Guide to E-Invoicing

Step 1: Check Eligibility

The phased approach means that not all businesses need to be ready for e-invoicing at the same time. The first step should be to check when your business needs to be compliant so you can be prepared. Implementation timelines can be changed by the Inland Revenue Board of Malaysia (IRBM). It’s crucial to stay informed by checking the official IRBM website for updates.

Step 2: Choose Your Sending/Receiving Method

There are two main options for sending and receiving e-invoices. The right solution for you will depend on your invoice volume.

• Low Invoice Volume. Smaller businesses can utilise the IRBM’s official portal – MyInvois. Through the portal, users can manually enter in invoice data to send as well as in their own system. This will become quite a resource burden if you send a lot of invoices.
• Medium to High Invoice Volume. Businesses with higher volumes or more complex needs can integrate directly with MyInvois. Most businesses will need an e-Invoicing solution provider, like Valtatech, to do this. Your existing system will send and receive invoice data directly from MyInvois.

In short, using MyInvois directly doesn’t need any setup but is labour intensive. Using an e-Invoice solution provider is automated but requires some setup.

Step 3: Choose an E-Invoicing Solution

Selecting the right e-invoicing solution is essential for a seamless experience. When exploring your options, consider the following factors:

• Compliance: Ensure the solution adheres to Malaysian e-invoicing standards and integrates with MyInvois.
• e-Invoicing expertise. E-invoicing is a great opportunity to improve your processes end to end. Your solution provider should have expertise in the technology behind e-invoicing. But they should also have expertise in process improvement and optimisation. This will ensure you get the best value for your investment in e-Invoicing.
• Features: Consider what features are a ‘must have’ for your business. Ensure that your chosen provider can deliver those features. At least look for automated invoice generation, data validation and real-time tracking.
• Integration: Integration is key for e-invoicing. You want a solution that will integrate with your existing system. Good e-Invoicing solution providers will integrate with legacy systems. If you are being advised to upgrade your system – please check with us first as you probably don’t need to.
• Security: Data security is vitally important. Ensure the e-invoicing solution adheres to security protocols to safeguard sensitive business data.
• Support: You want this transition to be as smooth as possible. Choose a provider that offers reliable and fast customer support.
• Future-proofing: Consider solutions that can scale as your business grows. It also needs to be flexible to manage changes to e-invoicing regulations in the future.

Our e-invoice solution can get you started with e-invoicing quickly and efficiently.

Step 4: Configure Your E-Invoicing System

The configuration process will be completed by your e-Invoice solution provider. You will need to provide some information to them to assist and typically involves:

• Setting up user accounts with appropriate access levels.
• Assessment of current system to ensure you can include all mandatory fields
• Integrating your e-invoicing system with your software

Step 5: Start Issuing E-Invoices

With your system configured, you can begin issuing e-invoices. With an integration in place, you will create invoices in your system as usual. Invoices are automatically checked and sent to the MyInvois system for processing.

Step 6: Manage E-Invoice Responses

The e-invoicing system allows you to receive and manage responses from your buyers. These responses may include acceptance, rejection, or requests for clarification. A robust system will ensure timely notifications and efficient management of these interactions.

With e-Invoicing, Malaysian businesses can gain a competitive edge. This beginners guide is a solid foundation for getting started. The challenge lies in the details so make sure you work with a partner you trust. Remember, staying informed about the latest IRBM updates is crucial. Don’t hesitate to contact us for further help or explore our e-invoice solution.

Frequently Asked Questions

What are the potential tax implications of e-invoicing?

E-invoicing can improve tax compliance and potentially lead to faster tax refunds. You should speak with a tax advisor to understand the implications for your business. Particularly related to record-keeping and potential tax deductions related to e-invoicing costs.

Will e-invoicing impact businesses with a large volume of outstanding invoices?

While e-invoicing can hurry payments in the long run, there might be an initial change period. This may impact you if you have a high number of outstanding invoices. You should consider strategies to manage the transition your customers will go through.

What happens if a buyer rejects an e-invoice?

The e-invoicing system will notify you of any rejections and the reason why.

What are the long-term implications of e-invoicing for the Malaysian business landscape?

There are many expected benefits for e-Invoicing. It is expected to increase transparency, improve tax collection efficiency and streamline business interactions. It should also open up the economy to further digitalisation. Staying informed about future developments can help businesses leverage these opportunities.