How To Implement E-Invoice After 1 Aug 2024

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Implementing an e-invoice system for a business of any size involves several comprehensive steps. This is to ensure a smooth and efficient transition from traditional invoicing methods to a digital platform.

By 1 Aug 2024, Malaysian companies with a turnover of >RM100 million and above are required to implement e-invoicing fully within their day-to-day operations. For companies with turnovers < RM100 million, this article will help you prepare or kickstart your e-invoice adoption process ahead of schedule.

Use this flowchart below to work out the best options for your business to get started sending e-invoices.

(If you prefer written instructions, jump ahead for a detailed checklist to guide your process.)

Flowchart on how to implement e-invoice after 1 Aug 2024 in 7 steps for Malaysian businesses

How To Implement E-Invoice After 1 Aug 2024 (Step-by-Step Checklist)

Step 1: Start by Understanding LHDN Requirements

The first step is understanding the legal and regulatory requirements of Inland Revenue Board Malaysia (IRBM). It’s essential to ensure that the e-invoicing solution meets these requirements, such as format standards (e.g., XML, JSON) and submission protocols. Consulting legal experts or industry professionals can help interpret and comply with these regulations, ensuring that your e-invoicing process is legally sound.

Step 2: Nail Down Your Business Goals

Next, evaluate your business needs and objectives. Identify the primary goals for implementing e-invoicing, such as improving efficiency, reducing costs, and ensuring compliance. Conduct a thorough assessment of your current invoicing processes to pinpoint inefficiencies and areas for improvement. Gathering feedback from key stakeholders, including finance, IT, and customer service teams, will provide valuable insights into their pain points and requirements, helping to tailor the solution to your business’s specific needs.

Step 3: Determine the Right E-invoicing Method for Your Company Needs

Choosing the right e-invoicing solution is a critical step. LHDN offers 2 methods: via the MyInvois portal or APIs (third-party software that can connect to MyInvois). The first method is accessible to all businesses but can only process a limited volume of data, hence more suited for MSMEs. The second method requires time and money invested to acquire the technology and tweak current systems. However, this is ideal for businesses with huge transaction volumes.

Conduct market research to identify and evaluate various solutions, comparing features, pricing, and vendor reputation. Look for essential features like multi-format support, compliance, integration capabilities, and scalability. Engage with vendors for product demos and trial periods to test the solution’s functionality. Ensure the solution offers robust security features, complies with relevant regulations, and integrates seamlessly with your existing accounting and ERP systems.

Step 4: Draw Up a Masterplan

Once you have chosen a solution, plan the implementation process. Develop a detailed project plan outlining tasks, timelines, milestones, and responsibilities. Allocate the necessary resources, including budget, personnel, and time. Form a cross-functional project team that includes members from finance, IT, procurement, and customer service, and appoint a project manager to oversee the implementation process and ensure adherence to the project plan.

Step 5: Existing Systems, Meet The New E-invoicing Solution

Integration of the e-invoicing solution with existing systems is the next step. Work with your IT department to integrate the solution with your accounting, ERP, and POS systems, utilizing APIs or middleware for seamless data exchange. Prepare and migrate existing invoicing data to the new system, ensuring data integrity and accuracy during this process. Customize the e-invoicing solution to match your business processes and requirements by setting up invoice templates, payment terms, and other relevant settings. Configure user roles and access permissions based on your organizational structure to ensure appropriate access controls and data security.

Step 6: Test, Test, and Test Some More

Training and testing are crucial for a successful implementation. Develop comprehensive training programs for all users, including finance staff, IT, and customer service representatives, and provide training materials such as user manuals, video tutorials, and FAQs. Conduct thorough testing of the e-invoicing system, including functional testing, performance testing, and user acceptance testing, to identify and resolve any issues before going live.

Step 7: Pilot Run before Go Live

When going live, start with a pilot run involving a small group of users or a subset of transactions (Sandbox) to ensure everything is working smoothly. Gather feedback from pilot users and make necessary adjustments before full deployment. Once the pilot run is successful, roll out the e-invoicing system across the entire organization, communicating the go-live plan to all stakeholders and providing support channels for any issues that may arise.

Step 8: Always Be Monitoring for Improvements

Monitoring and optimizing the e-invoicing system is an ongoing process. Continuously monitor key performance indicators (KPIs) such as invoice processing time, error rates, and user satisfaction. Quickly address any issues or bottlenecks that arise and regularly review and optimize invoicing processes to enhance efficiency and user experience. Collect and act on user feedback to improve the system continuously.

Step 9: Maintenance is Key

Finally, ensure that the e-invoicing solution remains up-to-date. Keep the software updated with the latest features, security patches, and compliance requirements from the vendor. Perform regular system maintenance to ensure smooth operation and prevent downtime. Provide periodic refresher training sessions to keep users informed about new features and best practices and maintain an updated repository of support resources, including FAQs, troubleshooting guides, and contact information for support.

By following these detailed steps, you can ensure a successful transition to e-invoicing, achieving significant benefits such as improved efficiency, cost savings, and regulatory compliance.

Are you feeling confused by the e-Invoicing system?

Or overwhelmed by the numerous challenges and difficulties as you implement this new policy?

We understand the complexity of the e-Invoicing system and recognize that implementing it can be particularly challenging for small and medium-sized enterprises (SMEs). To help SMEs fully grasp and adapt to this new policy, we’ve designed a comprehensive 4-hour online course that covers EVERYTHING you need to know to transition to e-invoicing with confidence.

Whether you’re new to e-Invoicing and eager to understand the system, or someone with some foundational knowledge seeking to deepen your understanding, our course offers in-depth and practical insights to help you tackle the challenges of this system.

What you’ll learn in the course:

1. E-Invoicing System Framework

We’ll help you understand the entire framework of the e-Invoicing system, including its operational logic and key implementation points, so you can better adapt your business setup to e-Invoicing.

2. How It Works

We’ll explain the working principles of the e-Invoicing system, covering every step from generation and transmission to receipt, validation, storage, and management of electronic invoices. We’ll also demonstrate how to generate a compliant electronic invoice using accounting software.

3. Impact on Businesses

We’ll discuss the impact of e-Invoicing on businesses, from the responsibilities of business owners to what department managers and employees need to understand. We aim to clarify that implementing e-Invoicing is not solely the responsibility of the business owner but involves everyone in the company.

4. Policy Changes and Response

We’ll keep you updated on all e-Invoicing guidelines changes and provide the latest information and response strategies that you can apply into various scenarios within your business.

5. System Tools and Training

We’ll introduce you to various e-Invoicing systems and accounting software available in the market and provide insights into related training content. You’ll be equipped to decide which e-Invoicing system/software best suits your business needs to reduce costs and improve efficiency.

6. Q&A Session

If you have any questions or concerns that require professional answers, our expert instructors will address them at the end of the course.

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