Shocking Truths About e-Invoicing Workflow Issues (And How to Solve Them!)
In the rapidly evolving business environment, e-Invoicing has become a crucial tool for enhancing efficiency, reducing errors, and ensuring compliance with tax regulations. However, as beneficial as e-Invoicing is, many businesses face challenges in its implementation. This article explores the common issues in e-Invoicing workflows and provides practical solutions to overcome them, ensuring a seamless transition and improved operational efficiency.
Under the Continuous Transaction Controlled (CTC) mandatory e-Invoicing model adopted by Malaysia, digital invoices must be issued for every transaction, transmitted to the Inland Revenue Board of Malaysia (LHDN) for verification, and be shared with the buyer. Understanding the requirements for the whole process is essential for compliance. Hence, staying informed and preparing in advance can help businesses ensure smooth operations and avoid penalties.
Overcoming Common Challenges
As businesses navigate the implementation of e-Invoicing, they often encounter several challenges that can hinder the efficiency and effectiveness of their invoicing processes. From obtaining necessary tax information to managing digital signatures, these obstacles can seem daunting. However, with the right strategies and solutions, these challenges can be effectively addressed. Below, we explore some of the most prevalent issues in e-Invoicing implementation and provide practical solutions to overcome them, ensuring a smooth and compliant e-Invoicing workflow.
Challenge 1: Access to MyInvois Portal
Solution: Company Management should provide permissions to identified representatives to access the MyInvois Portal, if they decide to submit e-Invoices manually, or select an efficient e-Invoicing software for automatic submission, which feeds transaction data from their existing ERP/ business software to LHDN servers. Proper access management ensures that authorised personnel can manage e-Invoicing effectively.
Challenge 2: Difficulties in Accessing the MyInvois Portal
Solution: In order to avoid issues in e-Invoice creation, staff in-charge of e-Invoicing should clear the browser’s cache regularly to ensure optimal performance when accessing MyInvois Portal. This simple maintenance step can prevent access technical issues and improve user experience.
Challenge 3: Difficulty in Obtaining Buyer’s Tax Identification Number (TIN) Details
Solution: While some businesses might encounter some problems in obtaining TIN details, LHDN has announced an interim relaxation period (grace period) of 6 months, allowing businesses additional time to gather the necessary information, ensuring compliance without immediate penalties.
Actually, obtaining your TIN is a simple process:
1. Log in to the MyTax Portal in LHDN website, and access your business information to retrieve your TIN.
2. For those unable to find their TIN on MyTax Portal, click “e-Daftar”, fill in the required field, and click “Search” to register your TIN.
Challenge 4: Business Registration Number (BRN) Information
Solution: Taxpayers registered with the Company Commission of Malaysia (SSM) are required to input the new business registration number (12-digit characters) for the purposes of e-Invoice issuance. Accurate BRN entries are crucial for compliance and transaction validation. However, to prevent the lack of BRN from triggering validation failures, LHDN has temporarily disabled the requirement of BRN from the e-Invoice submission process.
Since SSM has changed the format of BRN on 11 October 2019, some businesses might not be aware of their new 12-digit BRN. To check it, one may visit the SSM portal and search for their BRN through the e-Search, e-Info or MyData platforms.
Challenge 5: Tax Deductibility
Solution: Businesses can use either e-Invoices or existing documentation for tax deduction purposes. This flexibility ensures that companies remain compliant while transitioning to the e-Invoicing system.
Challenge 6: Transacting with Businesses under Different Implementation Phases
Solution: Businesses that fall under a later implementation phase are not required to issue e-Invoices, even when dealing with those from an earlier phase. During the interim relaxation period (grace period), usual business practices are still allowed. This ensures that businesses can continue operations smoothly while adapting to new requirements.
Challenge 7: Timing for the Issuance of e-Invoice for Importation of Goods/ Services
Solution: For importation of goods from foreign suppliers, e-Invoices can be issued in the month following customs clearance. For importation of services, the e-Invoice must be submitted by the end of the following month upon payment or receipt of invoice, whichever is earlier. This timing flexibility ensures compliance while accommodating different transaction timelines.
Challenge 8: The Need for e-Invoice Rejection and Cancellation To Be Submitted Within 72 Hours
Solution: If businesses would like to reject and cancel an e-Invoice more than 72 hours after an e-Invoice is submitted, they can nullify the earlier e-Invoice by issuing a Credit Note/ Debit Note/ Refund Note e-Invoice. This ensures that corrections can be made accurately even after the 72-hour window for rejection and cancellation.
Challenge 9: e-Invoice Issuance for Sales on e-Commerce Platforms
Solution: e-Commerce platforms will issue e-Invoices on behalf of merchants. Therefore merchants must provide accurate business information to the platform providers to ensure proper transaction documentation as well as legal compliance.
Challenge 10: Limits on Submission Size
Solution: Follow the Software Development Kit (SDK) guidance and minimise files to comply with limits on submission sizes. This ensures that submissions are accepted without issues.
Challenge 11: Difficulty in Receiving E-mail Notifications
Solution: To receive timely e-mail notifications about successful validation of e-Invoices, businesses should update their taxpayer profile through the MyInvois Portal. Keeping profiles updated ensures that critical information is delivered effectively.
Challenge 12: Submitting Large Number of e-Invoices through MyInvois Portal
Solution: Businesses with high transaction volumes yet still opt for manual submission may find batch submission through spreadsheets a convenient way to generate a large amount of e-Invoice efficiently. This function ensures that large volumes of e-Invoices (up to 100 e-Invoices per batch) are processed without delays.
Challenge 13: Selecting the Right Service Provider
Solution: If your business opts for an automated e-Invoicing solution, you should evaluate service providers based on your criteria and priorities, such as technology capabilities, as well as experience in serving clients from your industry, to ensure they meet both your business needs as well as compliance requirements.
Challenge 14: Data Security Measures
Solution: Whichever e-Invoicing solution you choose, do ensure compliance with ICT Safety Policy and ISO standards for data security. Adhering to these measures protects sensitive information and maintains regulatory compliance.
Challenge 15: Understanding the e-Invoice Procedures and Guidelines
Solution: Entrepreneurs and managers who are still confused about e-Invoice procedures and guidelines should reach out to LHDN support at the MyInvois Helpdesk (web: https://www.hasil.gov.my/en/e-invoice/, email: [email protected] or helpline: +603-8682 8000) for assistance. Access to expert support can clear doubts and ensure proper implementation.
Automate Your e-Invoicing for Greater Efficiency
While submitting e-Invoices manually using the default platform by LHDN – MyInvois Portal is completely compliant and free, it can become cumbersome as transaction volumes grow. To manage high volumes efficiently, businesses should consider automatic submission solutions such as the IFCA e-Invoicing Solution. This solution captures transaction details from your ERP or business software and transmits them to LHDN for e-Invoicing submission seamlessly through Application Programming Interface (API). It saves time, reduces costs, minimises manual errors, and frees up manpower, enhancing your overall operational efficiency.
Addressing common e-Invoicing challenges is essential for ensuring a smooth workflow and reaping the benefits of this digital transformation. By understanding the phased implementation and proactively addressing issues, businesses can enhance efficiency, improve compliance, and optimise their e-Invoicing processes. Stay informed, seek support when needed, and leverage the flexibility and tools provided by e-Invoicing systems to streamline your financial operations.
If you are trying to streamline your e-Invoicing operations and achieve greater business efficiency, contact IFCA Software.
