Beginning August 1, 2024, e-Invoicing has become compulsory for businesses. This is not just about going paperless, but also to ensure businesses are strictly tax compliant with government rules and regulations.

What is e-Invoicing?

e-Invoicing is when business taxpayers are required to submit their invoices digitally and get it validated by the Inland Revenue Board of Malaysia (IRBM). The aim is to digitise invoicing and establish invoices that follow tax rules and regulations.

The e-Invoice model has two options for taxpayers:

The MyInvois Portal: This is hosted by the IRBM and is accessible to taxpayers for free.
Application Programming Interface (API): API allows direct data transition between the taxpayers’ system and MyInvois Portal.

The government is also offering a tax deduction of up to RM50,000 per year of assessment for expenses related to environmental, social and governance initiatives, and consultation fees for Micro, Small, and Medium Enterprises (MSMEs). This is effective from the year of assessment 2024 to the year of assessment 2027.

Issues with e-Invoicing adoption

However, any technological change is challenging and there may be some resistance to e-Invoicing such as:

Adjustments to new technology.
Data security concerns.
Cost of new system implementation.
Working with suppliers and customers.

This is why factors such as education, change management, and support, among others, are crucial for successful e-Invoicing adoption. So, here are some ways to navigate the resistance to e-Invoicing.

Conduct education and training

Education is important to make sure that employees understand information such as legal guidelines, requirements, and technical aspects of the system.

Education can be provided through workshops, webinars, and training sessions. These training sessions should also cover the benefits of e-Invoicing and also address any misconceptions.

Have a change management plan

Change in any business is scary. This is where having a change management plan can help. With proper communication and early stakeholder involvement in transition processes, businesses can tackle any concerns proactively.

Therefore, having a robust change management plan that outlines timelines, roles, responsibilities, processes, and support structure helps employees adopt the new system. Initiatives such as establishing processes like approval layers before submission to IRBM would be helpful in ensuring tax compliance.

Demonstrate the benefits

A study revealed that e-Invoices are processed at up to 90% less cost than paper invoices, while the cost for resolving exceptions and disputes is reduced by up to 70%. Moreover, it enables faster processing and payment of invoices which improves cash flow for businesses.

Demonstrating these benefits of e-Invoices with case studies, examples, or testimonials can educate relevant stakeholders in the company, while overcoming any resistance.

These are some benefits to highlight:

IBRM’s e-Invoicing initiatives can streamline processes and ensure compliance.
Businesses can save time and reduce errors through automated processes.
Businesses can improve cash flow with faster invoice processing, and enhance data accuracy and accessibility.

Businesses could also look into leveraging a software solution to help simplify this process and give support during the early adoption stages. As this is new to the Malaysian market, seeking advice or necessary support from consultants is also a good idea.

Provide support

The adoption of new technology will undoubtedly come with questions and a steep learning curve. This is why continuously offering support to employees is imperative. Here are some ways you can do that:

Prepare online resources and support teams to help employees navigate the new system.
Have a step-by-step guide whether in written form or video tutorials for employee reference.
Draft frequently asked questions and troubleshooting tips to help employees navigate any challenges faced.
Partner with an e-Invoicing solution provider that offers customers support and guidance.
Request early support from a software provider to ensure smooth implementation.

Collaborate with suppliers and customers

For successful e-Invoicing, working with everyone in the supply chain is important. Businesses can host joint training sessions, share success stories, and work together with their partners to address any issues.

Through a collaborative environment, businesses can thrive with e-Invoicing as everyone is on the same page and working towards a common goal.

Address data security concerns

The digital age comes with worries of privacy and data leaks, which is why it’s only natural that data security is a major concern for businesses in adopting any new technology.

Some of the common data security risks are:

Employee errors.
Internal security dangers.
Ransomware.
Social engineering attacks.
Loss of data during cloud migration.
Tax data leaks.

Additionally, with the e-Invoicing implementation, businesses might also be operationally affected as it requires a different process than usual to create invoices. This is why looking into a solution that simplifies business operations processes and automates manual work could be beneficial.

Software providers must also be transparent in how they collect, transmit, as well as store and use data types. Security measures should include encryption of data, secure access controls, and regular security audits.

Invest in software solutions

To ensure e-Invoices are in the required format and can integrate into the government systems, businesses may need to upgrade their current system or to implement new systems which support e-Invoicing. Middleware softwares should also be considered as such systems are able to consolidate invoices without constant system updates.

MyInvois Portal allows softwares to directly integrate with them through API, allowing submission of e-Invoices to be done seamlessly. With this, taxpayers remove the need to manually create and submit these invoices within the MyInvois portal, which further saves time.

When selecting a software solution for e-Invoicing, you should consider the following:

Automatic or seamless e-Invoice submission directly to IRBM.
Simple onboarding process with buyers’ and suppliers’ company details for e-Invoice.
Approval layers with flexibility for businesses to delete and amend incorrect invoices before submission.
Automatically re-submit invoices during issues such as MyInvois portal system downtime.
Regular software updates to ensure invoices are always tax compliant, should there be new IRBM requirements.

Businesses can consider AutoCount which offers a comprehensive e-Invoicing solution that works in compliance with Malaysia’s tax regulations, while simplifying tax submissions. Check out AutoCount for more information here.

In addition, there is an annual grant available upon purchasing software. While the 2024 grant quota is used up, businesses can apply for the following batch.

E-Invoicing is a step towards greater efficiency

The e-Invoice system is a stepping stone in streamlining invoicing processes, cost reduction, and minimising errors, while also ensuring compliance with regulatory requirements.

With this, e-Invoices reduce the time and resources required for processing paper-based invoices, while also eliminating manual data entry. Additionally, businesses can ensure their invoices comply with regulatory requirements and are easy to track and store.

By leveraging government incentives and with suitable e-Invoicing solutions, businesses are able to position themselves for sustainable growth in the digital landscape. As the global market continues to move with technological advances, it is essential that Malaysian businesses take proactive steps to stay competitive and capitalise on the opportunities presented with e-Invoicing.

This e-Invoice News series is an collaboration with AutoCount.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.