Over 60 countries around the world have supported or mandated the adoption of e-Invoicing solutions for B2G, B2B, and B2C businesses.
Countries leading the charge in e-Invoice adoption include Brazil, Chile, Mexico, Denmark, Estonia, Finland, Norway, and Sweden, while countries like Malaysia are still in its infancy in the global race to e-Invoicing adoption.
Interestingly enough, with the rising waves of e-Invoicing mandates across the globe, the world’s top two economic powerhouses - the United States and China - are yet to pass mandatory e-Invoicing regulations for all businesses/taxpayers. That being said, the tide seems to be changing in China as the Chinese government is currently said to be in the process of overhauling its Golden Tax System.
So, getting ahead of your country’s e-Invoicing regulations would set your business up for regulatory compliance, while ensuring faster, more efficient, and error-free invoicing processes resulting in streamlined cash flow and financial certainty.
Malaysia’s tax authority – the Inland Revenue Board of Malaysia (IRBM) – has passed regulations making it mandatory for all Malaysian businesses to digitally transform their invoicing processes to e-Invoicing systems by July 2025.
Malaysia’s e-Invoicing implementation mandate was rolled out in phases based on a revenue threshold where businesses with an annual revenue:
Read more: The Future of e-Invoicing in Malaysia: Benefits, Challenges, and ImplementationStrategies
In this article, we look at the benefits that Malaysian businesses stand to gain by taking the next step in their digital transformation journey: e-Invoicing.
These e-Invoicing benefits include increased cash flow, greater organizational efficiencies, and faster payment processes.
By adopting e-Invoicing systems through Malaysia’s MyInvois portal or API integration, which facilitates the issuance, acceptance, and validation of e-Invoices, both the supplier and buyer stand to benefit from a highly streamlined and seamless process.
1. Account Reconciliation Improved
By integrating e-Invoicing protocols, suppliers no longer have to manually check invoices against bank statements to ensure accounting accuracy.
Once a supplier fulfills an order, the supplier issues an invoice to IRBM, Malaysia’s tax authority, via the MyInvois Portal or API. IRBM then performs a near real-time invoice validation and payments.
This process also applies to e-Invoice adjustments. This means if buyers make deductions due to faulty goods, IRBM will step in to seamlessly facilitate the invoice adjustment.
2. Limited Disputes and Invoice Rejections
As the e-Invoicing process is automated, the buyer will no longer be required to provide their details manually. This contributes to the overall ease of doing business with Malaysian companies as it saves time for the buyer and supplier and ensures faster payment processes.
The automated nature of the e-Invoicing service also means a reduction in invoicing errors, and ultimately a reduction in invoice rejections.
IRBM’s e-Invoice validation process, coupled with its QR code feature, ensures buyers of invoice authenticity, lending certainty to the payment process and reducing any disputes that may arise between buyers and suppliers.
1. Productivity Gains Through Automation
As electronic invoice generation is automated, buyers are able to fast-track invoice approvals and payments.
Buyers can save time previously spent on chasing and rectifying invoice errors, and instead spend that time on other high-value tasks, inevitably resulting in greater business efficiencies.
2. Early Payment Discounts
With the promise of faster e-Invoice processing, approval, and payments, buyers can benefit from early payment discounts. Early payment discounts are when buyers are granted discounts on purchases or transactions for settling the total amount before the payment due date.
Although early payment discounts are granted at the supplier’s discretion, the faster processing speeds of electronic invoices mean that buyers have a greater chance of complying with the terms necessary to receive early payment discounts.
1. Reduction of Invoice Processing Costs
E-Invoicing would require companies to transform their paper-based invoicing processes to electronic invoicing. Needless to say, adopting a digitalized invoicing system would lead to the partial or total elimination of paper usage in the invoicing and payment cycle.
By eliminating paper usage, suppliers and buyers would no longer have to incur the relatively high costs associated with paper purchase, printing, and postage. This would drive down the cost of invoicing.
Additionally, time saved on manual invoice creation means that both the buyer and suppliers’ accounting teams would be able to direct that time to more high-value tasks that drive the company’s accounting efficiency.
2. Customer Satisfaction Improved
The MyInvois Portal or API integration enables buyers to have real-time access to invoices, allowing them to monitor their invoice and payment validation status via on-the-go notifications.
As the electronic invoicing process provides greater transparency and higher levels of accountability, suppliers would be able to build a positive reputation among buyers, resulting in better supplier-buyer relationships and consequently an improved customer experience.
E-Invoicing is revolutionizing the way businesses manage their finances. By streamlining the invoicing process, it accelerates payments, reduces late payments, and enhances overall cash flow. Here’s how:
1. Faster Invoice Processing Leads to Faster Payments
Electronic invoices on Malaysia’s MyInvois portal or API integration are delivered immediately and receive near real-time validation.
Faster invoice processing means suppliers can expect to receive faster payments, consequently improving supplier-side cash flow. What’s more, by offering early payment discounts to buyers, suppliers can further benefit from better cash flow, crucial for a business’ financial health.
2. Better Cash Flow Predictions
Suppliers would have access to real-time invoicing and payment data, enabling them to accurately predict their future cash flow and make business decisions accordingly.
This e-Invoicing capability grants suppliers and buyers greater control over their respective financial futures, leading to better cash flow management.
3. Improved Financial Reputation
By eliminating paper, printing, and postage costs and leveraging the benefits of better cash flow prediction, companies could build a strong financial reputation, which would ease the process of receiving favorable financial conditions from banks and other financial institutions.
By implementing e-Invoicing, businesses can significantly improve their cash flow, reduce administrative costs, and enhance their financial performance leading to greater financial stability.
Businesses around the world are racing to adopt e-Invoicing systems into their digital framework to benefit from greater efficiency gains, better cash flow management, and faster processing and payment speeds.
The rising trend of global electronic invoice adoption has prompted the Inland Revenue Board of Malaysia (IRBM) to pass regulations making it mandatory for Malaysian businesses to follow suit.
Get in touch to get ahead of the global e-Invoicing race and ensure compliance with Malaysia’s most recent e-Invoicing regulations.