Malaysia e-Invoice: Time is pressing, are you ready for it?

[kwc1731]

As at writing this blog, the technical specifications from LHDN is still not release yet but I am thinking to share a few words about “What should one needs to do now in order to meet the imminent Go Live deadline?

Here is my checklist for your consideration:

1. Procurement needs to start engaging a service partner for the e-Invoice project. If your company has a long procurement process, I will encourage you to start working on it immediately to avoid missing the Go Live deadline. In early December 2023, SAP has announced SAP DRC on public cloud will be the solution for e-Invoice in Malaysia. The first release will be ready by early April 2024 subject to Technical Specifications or SDK will be released soon by LHDN. The solution comes with PEPPOL for distribution of e-Invoice to buyers. Other things that expect to be released together with SAP DRC will includes SAP notes that need to be installed to make changes to the fields required by LHDN in order to generate the .xml or json file. Besides, one time registration with PEPPOL may be needed to validate your company profiles.  
2. Make an assessment of your existing system for both Technical and Business requirements. Below are part of the activities that are needed.
   1. 1. The functional specifications from LHDN is available and can be found at LHDN Malaysian, one of the guidelines given all the 51 fields required and additional 12 fields needed if you involve with Import and Export. The engage partner can assess your existing system as early as now to map all the relevant fields that are needed for your Company. Identify both the mandatory and optional fields that are needed by your Company. SAP will issue SAP Notes for the fields change needed but initial assessment is still relevant.
      2. Despite SAP will release the SAP Notes as per the previous point but I will still anticipate that there are still some challenges that need to address by each Company together with their engaging partner. For example, if the fields recommended by SAP to use in the standard system to comply with the field requirements and the Company has used those fields in their existing program then a decision has to make on what needs to be done.
3. Change Management – if there is a need to change in role as to who will in-charge and process the e-Invoice, how to handle any rejection process, create new revise Invoice, Debit Note, Credit Note, all these new processes will need to be communicated and agreed by all parties. Transactions that were posted into General Ledger that has no buyers related information may need to change during e-Invoice era.
4. Communication – I think this activity is crucial for 2 reasons.
   1. In order to comply with e-Invoice, there are some buyer information needed from your Buyers. For example: Buyer's TIN number, email address, contact person etc for the use of automatically distribution of e-Invoice to them.
   2. Send emails or any forms of correspondence to all your buyers by letting them know that your organization is going to implement e-Invoice and please expect some process flow changed during the e-Invoice era. This is the upmost important so that they will not ignore your invoice and not making any payments to the Company. They make afraid of scam invoice if no proper communication took place.
5. Update Company Standard Operation Procedures (SOP) for all the changes made.
6. Training for all business users on the new processes to familiarize the team on the new business processes.
7. Testing – no matter how big or small the project, testing is something that cannot be avoided otherwise it will put you into risks and problems when it is in Production. It can be broken down into 2 testing types; independent and integration testing.
   1. End to end testing for all the scenarios that were impacted by the new e-Invoice processes.
   2. Integration testing with LHDN system. Further guidance from LHDN may be released to confirm how the integration testing works for individual Company. I just hope that solution from SAP will not need to have a separate testing with LHDN. Let's wait for further guidance.

Hope the above will give you some ideas on how to approach the e-Invoice implementation.