E-Invoicing Solutions in Malaysia: e-Invoice Malaysia for SMEs

I’ve been exploring various e-invoicing solutions and middleware options available in the Malaysian market. I’d like to share my thoughts and recommendations to help businesses, especially SMEs, navigate the complex landscape of e-invoicing solutions.

Understanding the E-Invoicing Landscape

The implementation of e-invoicing in Malaysia has brought about significant changes in how businesses manage their invoicing processes. While the government-provided MyInvois portal offers a free solution, many businesses are looking for more robust options that can integrate with their existing operations and provide additional features.

Some businesses will also take the opportunity to change or migrate to new system that further suit their needs. While some they want to retain their existing system but still being compliance with the LHDN e-invoice initiative.

MyInvois Portal vs ERP / Accounting Software vs Middleware

As businesses prepare for e-invoicing compliance in Malaysia, they face three main options: directly accessing the MyInvois portal, utilizing ERP / Accounting Software, or using Middleware solutions.

Each approach has its own advantages and considerations:

MyInvois Portal:

Pros:

• Free to use
• Directly compliant with LHDN requirements
• No need for additional software or integration

Cons:

• Manual data entry required
• Limited automation and integration capabilities
• Potential for human errors in data entry

Ideal for: Small businesses with low invoice volumes and simple invoicing needs.

ERP / Accounting Software:

Pros:

• All-in-one solution for accounting and e-invoicing
• Seamless integration between financial data and e-invoices
• Have cloud-based solutions, allowing for remote access and real-time updates
• May include additional features like manufacturing, inventory management and financial reporting

Cons:

• May be more expensive than standalone middleware solutions
• Switching ERP / accounting software can be complex for established businesses
• Especially if new ERP / accounting software doesn’t have previously customized add-on, then require addition cost to re-develop them.

Ideal for: Businesses looking to upgrade their entire operations and accounting process while achieving e-invoicing compliance.

Middleware Solutions:

Pros:

• Integration with existing ERP / Accounting Software (handling all LHDN e-Invoice compliances)
• Automation of invoice sending and error checking
• Bulk import/export capabilities
• Often include additional features like buyer self-service portals

Cons:

• Additional cost compared to direct MyInvois portal use
• May require implementation and training
• Might be expensive depend on the Middleware features, integration methods, and implementation & support fees

Ideal for: Businesses with complex systems or high invoice volumes that need seamless integration and advanced features.

When choosing between these options, consider factors such as:

• Your business size and invoice volume
• Existing systems and integration needs
• Budget constraints
• Need for additional features beyond basic e-invoicing
• Internal IT capabilities and resources

For many SMEs, accounting software with built-in e-invoicing support, like AutoCount, SQL Account, QNE AI Cloud Accounting, or Bukku, offer an attractive balance of compliance, integration, and additional accounting features.

These solutions can provide a comprehensive approach to financial management while ensuring e-invoicing compliance without the need for separate middleware or manual portal use.

Choosing the Right Solution

When selecting an e-invoicing solution, I always recommend businesses to consider the following factors:

Local vs. International Providers:

I strongly recommend opting for local solution providers. They often offer faster response times, better understanding of local work culture, and pricing in local currency.

However, some experience solutions provider that already setup a company in Malaysia and have their implementation or support team locally is also worth considering.

Integration Capabilities:

Assess how well the solution can integrate with your existing systems, whether through API, SFTP, or manual file uploads. Especially for API integration method that usually will involve both the existing systems provider and the new solution.

Data Storage and Document Management:

Look for solutions that offer long-term storage of e-invoice data and PDFs, as well as customizable invoice templates and automatic email functionality.

This is especially crucial for those ERP / Accounting Software that are not supporting e-invoices. So, the printing and storage of the validated e-invoice’s PDF copy will have to be relying on Middleware for long term storage (7 years), but not all middleware provide that option.

Buyer Self-Service:

Consider solutions that provide a portal for your clients to input their information and request e-invoices.

Quite important especially for brick-and-mortar businesses, that is mainly B2C. You won’t want buyer to hold up the line at the counter just to fill in the request form for e-invoice, right?

Pricing Model:

Evaluate whether a project-based, subscription-based, or volume-based pricing model best suits your business needs and invoice volumes.

Comprehensive Accounting Features:

If you’re considering upgrading your entire accounting process, look for solutions that offer both e-invoicing compliance and comprehensive accounting features. This can provide a more integrated approach to financial management.

Scalability:

Ensure the solution can grow with your business, accommodating increasing invoice volumes and potential expansion of operations.

Some solutions have tier-ed subscription to scale up or down. Some is unlimited and doesn’t require any additional cost when you exceed the limit.

Compliance Updates:

Choose a provider committed to keeping the software updated with the latest LHDN requirements and e-invoicing standards.

We usually recommend those MDEC accredited PEPPOL-Ready Solutions Provider, since accreditation process ensure they are up to a certain company size and foundation.

NOTE: Non-PEPPOL ready solutions provider also is viable options and maybe a long term existing company. Just they might not register for the accreditation and not going to support PEPPOL framework. Due to there’s no definite needs for it yet.

Support and Training:

Consider the level of support and training offered, especially if you’re implementing a new accounting system or complex middleware solution. This also was the main reason why we always recommend working with local solution providers.

Especially time zone difference does matter when handling support and maintenance. Imagine during Malaysia working hours system having issue, but all the support is only available after your working hours during midnight.

Sometime the language barrier and different accent also might post some challenges during training session.

Data Security:

Ensure the solution provides robust data security measures, including encryption and secure data centers, especially for cloud-based options.

Especially SaaS solutions that shared a same server and same system, the data segregation for all the users is very important.

Remember, the right solution should not only meet current e-invoicing requirements but also support your business’s overall financial management, operations and growth strategies.

Middleware Solutions: Features and Pricing

When considering middleware solutions, it’s important to understand the range of features and pricing models available. Based on my research and discussions with various providers, here’s an overview of what businesses can expect:

Common Key Features:

• Integration methods: API, automated SFTP, Excel file upload 
• Automated error checking and highlighting 
• Custom e-invoice templates
• Automated email of validated e-invoices to buyers
• Long-term data storage and retrieval
• Client portal for official e-invoice requests (particularly useful for B2C)
• Integration with local accounting software
• Additional features like reporting, reconciliation, export data, etc.

Private Deployment (Own Server)

Private deployment, also known as on-premises deployment, involves installing and running the e-invoicing software on the company’s own servers or on cloud.

Characteristics:

• Higher upfront costs for hardware / hosting and software licenses
• Greater control over data and customization options
• Typically requires in-house IT expertise for maintenance and updates
• May offer more robust security for highly sensitive data
• Often preferred by larger enterprises or those with strict data sovereignty requirements

Benefits:

• Unlimited invoice volume (usually limited only by storage space)
• Highly customizable, including custom e-invoice templates
• Complete control over data and security measures

Pricing Models:

• One-off Implementation: RM30,000 – RM60,000
• Annual License Fees: RM35,000 – RM60,000
• Support and Maintenance: RM0 – RM12,000 (sometimes included in annual fees)
• Additional customization or add-ons: Starting from RM1,000

SaaS (Software as a Service)

SaaS solutions are cloud-based, where the software is hosted and maintained by the service provider and accessed via the internet.

Characteristics:

• Lower upfront costs, typically with a subscription-based pricing model
• Easier to implement and faster to deploy
• Automatic updates and maintenance handled by the provider
• Scalable and flexible, allowing businesses to adjust usage as needed
• Accessible from anywhere with an internet connection

Benefits:

• Lower initial investment
• Easier to scale up or down based on business needs
• Regular updates ensure compliance with the latest regulations
• Often includes features like automated backups and disaster recovery

Pricing Models:

• One-off Implementation: RM0 – RM25,000
• Additional costs may include: SFTP setup, custom templates, data archiving, and file upload portals
• Monthly / Annual Fees: RM100/month – RM60,000/year (some is by monthly credit limit, and some is unlimited)
• Some charge per invoice: RM0.12 – RM0.50 per einvoice
• Support and Maintenance: Usually included in monthly/annual fees

The total cost can vary widely based on features and invoice volume, ranging from RM1,200/year for basic plans to RM60,000+/year for comprehensive solutions.

Recommendations for Different Scenarios

Low Volume Invoicing:

If you have a low monthly e-invoice volume, consider using the MyInvois portal directly or opting for a middleware solution with a monthly subscription model that come with a limit.

Existing Accounting Software: 

Check if your current accounting system offers e-invoicing modules or add-ons. Many providers are updating their software to comply with e-invoicing requirements.

Outsourced Accounting: 

If you outsource your accounting, consult with your bookkeeper about their preferred system. Cloud-based solutions like Bukku Accounting or AutoCount cloud offer free e-invoicing options with certain limitations.

Custom Systems Requiring Middleware: 

For businesses with existing systems that need middleware, solutions like AISoftBox offer affordable e-Invoicing options for SMEs. If there’s a need for larger group of companies with multiple SMEs, can contact us for more recommended solutions that we evaluated before.

Phase 2 Implementation:

If you’re in Phase 2 of the e-invoicing rollout, it’s crucial to have a contingency plan in place. This may involve using the MyInvois portal temporarily or implementing manual solutions while you finalize your long-term e-invoicing strategy.

Also, do remember to follow the practices required during the Relaxation period if needed.

Case Study: E-Invoicing Consultation for an ERP User

To illustrate our consultation process and approach, let’s look at a recent interaction with a company using ERP system:

1. Initial Assessment:
   • Implementation phase: January 1, 2025
   • Current system: ERP System
   • Integration preference: API
   • E-invoice volume: Less than 500 per month
2. Key Requirements:
   • Minimal changes to existing operations
   • Data validation feedback to accounting system
   • Custom e-invoice template compliant with IRBM requirements
   • Automated email of validated e-invoices to buyers
3. Consultation Process:
   • Clarified the client’s needs and current setup, notice their ERP system unable to integrate through API
   • Explained different middleware options and their features
   • Discussed integration methods, focusing on automated SFTP capabilities
   • Addressed concerns about future invoice retrieval and printing
   • Explored data ownership and storage preferences
   • Provided an overview of pricing models for different solution types
4. Recommendations:
   • Explore middleware solutions team with that specific ERP integration experience
   • Focus on providers offering automated SFTP integration to minimize operational changes
   • Propose a solutions provider that is with bundled pricing, so later no need to pay again for API integration when it became possible
   • Consider solutions with custom template options and data validation feedback, along with automations of email sending capability
   • Look for providers with local support teams for better responsiveness
5. Provided Solutions:
   • Evaluated and arranged meetings with suitable middleware providers
   • Prepare to share detailed requirements with potential providers for accurate quotations
   • Provide quotations review assistance to help clarify and do comparison among other solutions providers
   • Review the proposal’s terms and conditions, implementation timeline, scope of work and deliverables to make sure the client’s benefit is properly covered

This case study demonstrates our thorough approach to e-invoicing consultations, ensuring that we address all client concerns and provide tailored recommendations based on their specific needs and existing systems.

Summary and Insights

Choosing the right e-invoicing solution is a critical decision that can significantly impact your business operations.

While there’s no one-size-fits-all solution, understanding your specific needs, evaluating the available options, and considering factors like integration capabilities, pricing, and local support can help you make an informed decision.

Remember, the e-invoicing landscape is evolving rapidly, and it’s essential to stay informed about new developments and solutions. Don’t hesitate to seek expert advice or request demos from multiple providers before making your final decision.

With the right approach, e-invoicing can streamline your processes, improve accuracy, and contribute to your business’s overall efficiency.

If you need any help in choosing the right e-invoicing solutions for your business, do check out our e-Invoice Services page and see how we can assist.