However, even as e-Invoicing becomes the standard, the question remains: should you submit e-Invoices manually or automate the process?
In this article, we’ll break down the differences between manual and automatic e-Invoice submissions, exploring the benefits, challenges, and how to determine the best fit for your business.
An e-Invoice is an electronic version of a traditional invoice that’s digitally generated, delivered, and processed. Unlike paper invoices, e-Invoices offer a streamlined, faster, and more efficient way to request payments from customers. They ensure compliance with the latest tax regulations in Malaysia, such as the Cukai Jualan dan Perkhidmatan (SST), by automating the creation and submission of tax-compliant invoices.
For micro and small-medium enterprises (SMEs) in Malaysia, the transition to e-Invoices isn't just about going paperless. It’s about enhancing transparency, improving business efficiency, and maintaining compliance with LHDN (Lembaga Hasil Dalam Negeri Malaysia), Malaysia tax authorities. By adopting e-Invoicing, businesses can avoid the manual, error-prone processes that are commonly associated with traditional paper-based invoicing.
Time-saving: Reduces the time spent on preparing, sending, and tracking invoices.
Error reduction: Automation reduces human errors in invoice creation.
Compliance:Ensures invoices meet SST requirements and LHDN tax regulations
Cost-effective: Lowers printing and postage costs.
Even though e-Invoices are digital, they can still be submitted manually. In this method, businesses typically insert and submit e-Invoices using MyInvois Portal by LHDN, and manually send them to customers via email or other method. This is a common practice among smaller businesses or businesses with a low volume of transactions.
Hands-on control: Business owners or accounting staff can personally review every invoice before it is sent out, ensuring accuracy and maintaining control over the process.
Low cost for very small businesses: For businesses with a minimal number of invoices to manage, manual submission may seem cost-effective since they do not need to invest in automation tools.
Free guideline by LHDN: MyInvois Portal is prepared by LHDN, which is the main revenue-collecting agency under the Malaysian Ministry of Finance. They had prepared a lot of free guideline to use MyInvois Portal in their website.
Time-consuming: Manually preparing and sending invoices is inefficient, particularly for growing businesses. This method requires significant time and effort, especially when dealing with a high volume of invoices.
Difficult to scale: As businesses grow, managing invoices manually becomes increasingly challenging. Handling hundreds or thousands of invoices can overwhelm your accounting staff, leading to bottlenecks in the process.
Delayed payments: The manual process of creating and sending invoices can result in slower payments, impacting your cash flow.
Automating the e-Invoice submission process eliminates the need for manual intervention, allowing invoices to be generated and sent automatically through accounting or invoicing software like Niagawan. Automation streamlines the entire process, from invoice creation to delivery, and can even include payment reminders, reconciliation, and tax reporting.
Efficiency: Automation reduces the time spent on repetitive tasks. With software like NiagaPlus or NiagaPos, e-Invoices can be generated based on pre-set rules and sent automatically to customers.
Error reduction: Since data is pulled directly from your financial records, the chances of errors are significantly reduced. This improves accuracy and eliminates the need for double-checking each invoice manually.
Seamless integration: Tools like NiagaPlus integrate invoicing with other accounting features like sales recording, bank reconciliation, and financial reporting. This integration allows for a smooth and consistent flow of information across your business operations.
Scalability: Automation is ideal for businesses expecting to grow. Whether you’re dealing with 10 or 1,000 invoices a month, automated systems can handle the increased volume without adding pressure to your accounting team.
Improved compliance: Automatic e-Invoice solutions like Niagawan ensure that your invoices are compliant with Malaysian regulations, reducing the risk of penalties for incorrect invoicing.
Initial setup cost: Investing in automation software can seem costly upfront, particularly for very small businesses. However, these costs are often outweighed by the long-term benefits.
Learning curve: There may be a learning curve when adopting automation tools, especially for business owners or staff unfamiliar with the technology. However, platforms like Niagawan are designed to be user-friendly and offer support to make the transition easier.
Manual submission requires considerable time, as every invoice must be created, reviewed, and sent manually. In contrast, automatic submission saves time by allowing the system to generate and send invoices without intervention. For growing SMEs in Malaysia, this time-saving benefit can free up resources to focus on other aspects of the business.
Manual invoicing might seem cost-effective for businesses with a low volume of transactions, but as the business grows, the hidden costs of time spent managing invoices manually add up. Automation, while requiring an upfront investment, can significantly reduce long-term costs by improving efficiency and reducing errors.
In Malaysia, keeping your business compliant with tax regulations is crucial. Manual invoicing makes it harder to ensure all invoices meet the necessary standards. Automatic systems like Niagawan ensure that all invoices are SST-compliant and can generate the reports you need for tax purposes.
When deciding between manual and automatic submission of e-Invoices, there are a few key factors to consider. Every business is different, and your choice should depend on the size of your business, the volume of transactions, and your long-term growth plans.
Business Size: For very small businesses with only a handful of transactions, manual submission might be sufficient. However, for SMEs with a growing customer base, automation can greatly improve efficiency.
Transaction Volume: Businesses with a higher volume of invoices will benefit from automation, as it reduces the workload and minimizes the risk of errors.
Available Resources: If your business has limited manpower or accounting expertise, investing in an automated solution like Niagawan can take the pressure off your team.
Manual Submission: A small boutique selling handmade crafts may only issue a few invoices each month. For this type of business, manual submission might make sense as it gives them hands-on control without overwhelming their resources.
Automatic Submission: A fast-growing e-commerce business handling hundreds of transactions per month would benefit from automating its e-Invoice submissions. This allows the business to scale without increasing administrative burdens.
If your business is ready to transition from manual to automatic invoicing, the good news is that tools like Niagawan make it easy. Our system is designed to simplify the invoicing process and provide comprehensive accounting solutions that can grow with your business.
Whether you're a micro-enterprise or an SME, NiagaPos and NiagaPlus offer the tools you need to automate your financial management and ensure compliance.
Both manual and automatic submission methods for e-Invoices have their place, but for businesses looking to grow, automation is often the better choice. Manual submission may work for small businesses with limited transactions, but as your business scales, the time-saving, error-reducing benefits of automation become clear. With tools like NiagaPos and NiagaPlus, automating your invoicing process can streamline your financial operations, reduce errors, and improve your compliance with local regulations.
In today's competitive business landscape, it’s crucial to adopt solutions that allow your business to run more efficiently. Consider transitioning to automated e-Invoice submission to save time, reduce stress, and position your business for long-term growth. Ready to make the switch? Explore Niagawan’s cloud accounting tools today!
