In today's digital landscape, businesses are increasingly adopting electronic invoicing, commonly known as e-invoicing, as a more efficient alternative to traditional paper documents. 

E-invoicing is a modern billing solution that enables companies to generate, send, store, and manage transaction-related documents electronically. This approach not only enhances accuracy and speeds up the invoicing process but also ensures that the terms of agreements between parties are effectively monitored and fulfilled.

As Malaysia moves toward a more digital economy, the government has made e-invoicing mandatory for all Malaysian businesses, with 7,400 companies already on board and 58 million e-invoices issued as of October 14, 2024. 

This initiative, rolling out in phases starting from August 2024, is designed to enhance the efficiency of the nation’s tax administration system. It aligns with the objectives of the Twelfth Malaysia Plan, which emphasizes the importance of strengthening digital services infrastructure and modernizing tax administration processes.  

Here are 5 common mistakes businesses should avoid:

1. Ignoring Customer's E-Invoice Experience

Most businesses focus on keeping their e-invoicing compliant but often overlook the customer’s experience in the process. 

For customers, e-invoicing can feel like an added chore, especially if it requires repeatedly entering information before each purchase. This can create frustration and reduce engagement.

2. Incompatible Formatting and Integration Oversight 

Selecting an e-invoicing solution that doesn’t integrate with your financial and commerce platforms can lead to inefficiencies, especially with compliance requirements.

In Malaysia, the Inland Revenue Board mandates that all e-invoices follow strict XML or JSON formats. Solutions lacking this compatibility can result in manual work, higher error rates, delayed submissions, and potential penalties.

Solution: Choose an e-invoicing solution that integrates seamlessly with existing systems and supports required formats such as EasyStore’s integrated e-invoicing. It simplifies compliance by automating compatibility checks and aligning directly with IRBM standards. Every e-invoice is generated in XML or JSON without the need for reformatting, reducing errors, ensuring smooth tax submissions.

3. Submitting Inaccuracy E-invoices

Did you know there are 55 mandatory fields to be filled for an e-invoice?

Any inaccurate information can lead to rejection and even penalties. Businesses should always ensure each e-invoice includes:

• Key Customer Information – Customer’s business tax number (TIN) or, if unavailable, the customer’s full name and IC number.

• LHDN Approved QR Code – A unique QR code that validates the e-invoice in the LHDN system.

• LHDN Approved Invoice Code – This code ensures each invoice is uniquely identifiable and correctly logged.

• LHDN Digital Signature – This digital signature authenticates the invoice, certifying it as legally compliant.

Solution: An API-integrated e-invoicing solution like EasyStore allows businesses to enter their business details and sync them to the LHDN MyInvois Portal. The API integration helps select the correct data, including real-time validation of the e-invoice by LHDN, ensuring the QR code, invoice code, and digital signature are properly generated.

4. Insufficient Planning and Preparation

Although e-invoicing is set to become compulsory for all taxpayers by 1st July 2025, many businesses believe they still have enough time to implement it closer to the deadline. However, this could lead to last-minute chaos, as both staff and customers will need time to understand how it works before it becomes the new norm.

Delaying implementation is a common mistake that could result in bigger challenges, increased errors, and potential negative impacts on efficiency, as well as the relationship with customers.

Solution: Start early. Implementation doesn’t have to be difficult. For businesses using EasyStore, simply activate the e-invoicing app – it’s as easy as that.

5. Employee Lack of Education and Training

Conclusion

To maximize the benefits of e-invoicing, businesses must avoid common pitfalls such as insufficient integration, inaccuracies in submissions, and inadequate employee training. 

By emphasizing robust security measures and leveraging solutions like EasyStore, companies can enhance operational efficiency, build customer trust, and ensure compliance with regulations.

Embracing e-invoicing not only streamlines processes but also positions businesses for success in an increasingly digital economy.

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