PETALING JAYA: A large number of micro, small and medium enterprises (MSMEs) are struggling to navigate Malaysia’s upcoming e-invoicing mandate, largely due to misinformation, manpower shortages and a persistent reliance on manual processes.
This is the finding of global e-invoicing provider Xero, based on a recent survey involving 500 MSMEs across the country.
“The ‘why’ is clear to most. It’s the ‘what’ and ‘how’ that businesses are grappling with,” Xero Asia managing director Karen Wines told theSun.
“Many MSMEs lack dedicated finance or tech teams to lead the transition. In fact 49% report challenges in digitising large volumes of data, while 45% cite limited internal technical expertise as a key barrier.”
She added that such struggles are not unique to Malaysia, as small businesses globally face similar hurdles in adopting digital systems. Karen said mindset remains a major stumbling block as many still depend on spreadsheets or manual record-keeping.
“The attitude of ‘don’t fix what isn’t broken’ makes some hesitant to adopt digital tools, especially if they associate them with higher costs, complexity, or a steep learning curve.”
Nevertheless, she urged MSMEs to embrace gradual digitalisation, saying that even small steps could deliver significant long-term gains.
“Smaller businesses often benefit the most. With limited staff and resources, automation helps cut time spent on repetitive tasks while improving cash flow visibility and accuracy.”
Meanwhile, Chia, Ka & Partners (CKP) managing partner Jeremy Chia welcomed the government’s recent decision to delay the rollout of e-invoicing, noting that many MSMEs are still unprepared.
He said confusion remains rife, with some wrongly assuming e-invoicing merely involves emailing invoices.
“In reality, it means adopting structured data formats, ensuring secure submission via the MyInvois portal, and integrating systems in line with the framework of the Inland Revenue Board (IRB).”
Chia said e-invoicing offers long-term advantages, including faster payments, better financial oversight and reduced human error.
“It will also nudge more SMEs to adopt monthly rather than annual accounting, improving financial transparency and record-keeping.
“The shift will ease audits, enable better tax planning and accelerate digitalisation across the sector.”
It was reported that Malaysia’s move towards e-invoicing is part of a broader effort to modernise tax administration under the Tax Reform Committee, established in 2018.
The IRB first outlined plans for e-invoicing in 2023 under the National e-Invoicing Initiative, citing the need to boost tax compliance, reduce fraud and improve efficiency.
Initially scheduled for rollout in Aug 2025 for businesses with RM100 million annual revenue, the mandate has since been staggered.
Following pushback from smaller enterprises, the government postponed implementation for MSMEs to January next year (for those earning RM1 million–RM5 million annually) and July 2026 (for those below RM1 million).
The delays come amid industry concerns over readiness, cost and integration challenges, especially among micro-enterprises that lack the digital infrastructure of larger firms.
Despite this, authorities have maintained that e-invoicing will be compulsory across the board, making preparation critical for long-term business resilience.
