Malaysia’s national e-Invoicing initiative: What SMEs need to know

LAST UPDATED: Apr 23, 2025

With the Malaysian government’s push towards a digital economy, small and medium enterprises (SMEs) must adapt to new requirements. One key development is the national e-Invoicing initiative. This initiative aims to modernize how businesses manage invoices, helping to streamline operations, improve compliance, and enhance efficiency across industries.

If you’re an SME in Malaysia, here’s what you need to know to prepare for the transition.

What is the national e-Invoicing initiative?

The national e-Invoicing initiative is a government-led project designed to implement a nationwide electronic invoicing (e-Invoicing) system. It’s part of Malaysia’s broader digital transformation strategy to promote transparency, reduce tax evasion, and improve the efficiency of financial processes.

At its core, e-Invoicing replaces traditional paper-based invoices with digital versions that are transmitted in real-time between suppliers, customers, and the Inland Revenue Board of Malaysia (IRBM).

Key benefits for SMEs

Adopting e-Invoicing offers several advantages for SMEs:

1. Improved cash flow: Faster invoice processing means quicker payments from customers. By reducing manual errors and delays, your business can maintain healthier cash flow
2. Reduced administrative burden: Automating the invoicing process frees up valuable time for your finance team, allowing them to focus on more strategic tasks
3. Enhanced compliance: e-Invoicing ensures that all transactions are recorded and reported accurately, helping SMEs stay compliant with tax regulations and avoid potential penalties
4. Cost savings: By eliminating paper-based invoices, businesses can reduce printing, postage, and storage costs

Timeline for implementation

The rollout of the national e-Invoicing initiative will occur in phases based on annual turnover:

• Phase 1: Mandatory e-Invoicing begins on 1 August 2024 for businesses with an annual turnover exceeding RM100 million
• Phase 2: Businesses with an annual turnover between RM25 million and RM100 million will need to comply starting 1 January 2025
• Phase 3: Businesses with an annual turnover between RM500,000 and RM25 million will need to comply starting 1 July 2025.
• Phase 4: Businesses with an annual turnover between RM150,000 and RM500,000 will need to comply starting 1 January 2026.

SMEs should start preparing now to ensure a smooth transition when it becomes mandatory for their business size.

How to prepare for e-Invoicing

Here are a few steps you can take to get ready:

1. Evaluate your current invoicing system: Assess whether your current software can handle e-Invoicing. Cloud-based accounting solutions like Xero offer seamless e-Invoicing capabilities, ensuring compliance with new regulations
2. Train your team: Make sure your finance and accounting teams are familiar with the new e-Invoicing requirements and how to use the necessary tools effectively
3. Engage with your suppliers and customers: Inform your business partners about the upcoming changes and work together to ensure a smooth transition to e-Invoicing
4. Consult with experts: If you’re unsure about how the initiative will impact your business, consider seeking advice from a tax advisor or accounting professional

How Xero can help

At Xero, we understand that regulatory changes can be challenging, especially for SMEs. Our cloud-based accounting platform is designed to simplify financial management and help businesses adapt to new requirements like e-Invoicing.

With Xero, you can:

• generate and send e-Invoices effortlessly
• track payments and manage cash flow in real-time
• ensure compliance with the national e-Invoicing mandate through automated reporting

Final thoughts

The national e-Invoicing initiative is a significant step towards a more digital and transparent economy in Malaysia. While the transition may require some effort, the long-term benefits for SMEs are undeniable. By starting your preparations now, you can position your business for success in this new era of digital finance.

Ready to embrace e-Invoicing? Explore how Xero can help your business stay ahead of the curve.

Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice.