Invoicing is essential to business. Apart from being an accounting transaction to collect revenue from customers, it is important for tax reporting and auditing. However, the traditional practice of paper-based invoicing is often time-consuming and error-prone. With digital technology and government mandates, electronic invoicing — e-invoicing — is being adopted. E-invoicing electronically creates and sends invoices to customers in a structured format. The invoice can then be automatically imported into the buyer’s accounts payable system. E-invoicing for manufacturers streamlines the payment process without manual intervention, reduces costs and improves efficiency.
E-invoicing in Malaysia
To support the growth of the digital economy, the government of Malaysia is implementing e-invoicing. It will be doing this to enhance the efficiency of Malaysia’s tax administration management and enable near real-time validation and storage of transactions for multiple industries.
A supplier will create an e-invoice after a transaction and send it to the Inland Revenue Board of Malaysia (IRBM). The IRBM will then validate the invoice and notify the buyer and supplier. Once validated, the supplier can share the e-invoice which carries a QR code with the buyer.
Benefits of e-invoicing
Compared to conventional paper invoice processing, an automated e-invoicing system provides some significant benefits.
- Ensures compliance with country regulations.
- Saves time by reducing the need for manual data entry and processing.
- Reduces costs by eliminating paper, printing, postage, and other physical materials associated with paper invoices. It also reduces manual labor costs associated with sending and receiving invoices.
- Reduces the risk of errors and inaccuracies that can occur with manual invoicing, such as data entry errors and lost invoices.
- Enables faster processing and approval of invoices, thereby improving efficiency.
- Improves cash flow by allowing businesses to receive payments faster.
- Provides greater visibility into invoice status and payment history, making it easier to track and manage payments.
- With encrypted file transfer and digital signatures, e-invoicing is a more secure way of sending and receiving invoices. It also ensures invoices are not lost.
- E-invoices enable access and analysis of line-level data that can drive better financial and procurement decisions.
How ERP addresses the challenges of e-invoicing
There are several challenges that companies need to consider when looking at e-invoicing. When looking at an ERP solution, companies should check it can address these challenges.
- Ability to handle varying regulations and standards for e-invoicing across different countries.
- Integration of the ERP to other applications is important so that specialist software providers of e-invoicing can deliver solutions for a particular country.
- Provide robust security for storing and transmitting e-invoices, and securely archive data for tax and legal purposes.
- Enable a live view of the document delivery and processing status directly from the ERP.
- Ensure there is good training and support to ensure smooth adoption from paper to electronic invoicing.
- A cloud-based ERP solution will allow e-invoicing from anywhere without the need for resources like printers or scanners.
Why manufacturers should use e-invoicing
E-invoices are generated in a structured digital format, making them easier to process and integrate into other systems. Unlike traditional paper invoices, e-invoices can be automatically imported into the buyer’s accounts payable system, reducing manual effort. E-invoices improve efficiency, cash flow, and real-time visibility into invoice status and payment history.
Manufacturers should embrace e-invoicing to comply with country-specific regulations, reduce the need for labor-intensive processes thus saving time and money, and minimize errors.
An ERP system with strong e-invoicing support provides companies with a solution that will handle e-invoicing as it evolves.
