E-invoice vs Traditional Invoice: What are the 8 Key Differences?

In 2024, the Inland Revenue Board of Malaysia (LHDN) will implement the e-invoice policy to enhance tax administration efficiency and support digital economic growth. There are 8 main differences between e-invoices and traditional invoices:

1. Different Invoicing Methods:Traditional invoices are typically paper-based and require manual filling and storage. In contrast, e-invoices record transactions electronically and can be uploaded directly using the MyInvois platform or API interface.
2. Different Storage and Viewing Methods:Traditional invoices require physical storage, taking up physical space. E-invoice information is stored within the LHDN system, and businesses and buyers can view the invoices anytime through their respective tax accounts (MyInvois) or accounting systems (API interface).
3. Different Verification Processes:Verifying traditional invoices is often complex and time-consuming. With e-invoices, businesses issue invoices and submit them to LHDN for verification through MyInvois or API. LHDN automatically verifies the invoices and notifies both the businesses and buyers of the results.
4. Different Modification and Cancellation Methods:Modifying traditional invoices after issuance is challenging. In contrast, e-invoices allow businesses to notify buyers and cancel invoices within 72 hours for corrections.
5. Different Implementation Phases and Targets:The implementation of e-invoices will occur in phases, starting with companies with annual turnover exceeding 100 million Malaysian Ringgit, followed by companies with approximately 25 million Malaysian Ringgit, and finally, all other companies.
6. Different Invoice Contents:Traditional invoices require detailed information about the buyer, seller, description of goods or services, quantity, date, price, and tax amount. E-invoices also require the same information but stored in electronic format, making it easier for search and analysis.

   

7. Different Invoice Numbering Methods:Traditional invoices require manual numbering, while e-invoices can automatically generate invoice numbers, reducing errors and improving efficiency.
8. Different Invoice Verification Methods:Traditional invoices require manual verification, while e-invoices can be automatically verified electronically, speeding up the verification process and improving accuracy.

The implementation of e-invoices undoubtedly brings innovation to tax administration in Malaysia and will have a profound impact on businesses’ operations. While there may be initial challenges, e-invoices are expected to become the new norm for daily business operations over time

Our services include:

• Offer advice on selecting the right e-invoicing system based on the specific needs and requirements of clients.
• Help organizations optimize their invoicing processes by identifying inefficiencies, automating manual tasks, and streamlining workflows.
• Offer recommendations for improving the end-to-end invoicing lifecycle.
• Advise on integration strategies for e-invoicing systems with existing ERP, accounting, and other business systems.
• Provide guidance on implementing robust security measures and ensuring compliance with data protection regulations when transmitting and storing e-invoice data.
• Assist organizations in managing the transition to e-invoicing by developing change management strategies, conducting training sessions, and facilitating communication with stakeholders.
• Identify potential risks and challenges associated with e-invoicing implementation, such as system downtime, data breaches, or non-compliance issues.
• Offer recommendations for mitigating risks and ensuring business continuity.