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E-Invoice

E-Invoice Guidelines: Navigating Disbursements and Reimbursements

Introduction

In business transactions, understanding the distinction between disbursement and reimbursement is crucial for effective financial management. This blog post will clarify these concepts, outline their processes, and provide real-life scenarios to illustrate their application.

Explanation

Reimbursements refer to out-of-pocket expenses incurred by the payee in the course of rendering services or selling goods to the payer (i.e., Buyer), which are subsequently reimbursed by the payer. Such expenses include airfare, travel, accommodation, telephone, and photocopying charges.

Disbursements are out-of-pocket expenses incurred by the payer (i.e., Buyer) and paid to a third party (on behalf of the payer) by the payee in connection with services rendered or goods sold by the payee to the payer.

Currently, Suppliers include both reimbursement and disbursement in their invoices to buyers.

Scenario 1

Supplier 1 issues an e-invoice directly to the Buyer for goods sold or services rendered. Subsequently, Supplier 2 makes a payment to Supplier 1 to settle the e-invoice issued to the Buyer, according to the arrangement agreed upon between Supplier 2 and the Buyer. As a result, Supplier 2 will issue an e-invoice to the Buyer for the goods sold or services rendered by Supplier 2.

Since Supplier 1 has already issued an e-invoice to the Buyer, this should not be included in the e-invoice issued by Supplier 2.

*Note: The figure Resources from LHDN Guideline: LHDN Guideline

 

Steps:

      1. Agreement: Supplier 2 enters into an agreement with the Buyer for the supply of goods or provision of services. As part of the arrangement, Supplier 2 will pay on behalf of the Buyer for any expenses incurred during the contract period.

      1. E-Invoice Issuance: Upon concluding a sale or transaction, Supplier 1 issues an e-invoice directly to the Buyer, ensuring it meets the required fields outlined in the e-invoice guidelines and submits it to IRBM for validation.

      1. Payment Settlement: Supplier 2 makes payment on behalf of the Buyer to Supplier 1 to settle the outstanding amount. Supplier 1 provides payment proof to Supplier 2 for the settlement.

      1. E-Invoice from Supplier 2: Supplier 2 issues an e-invoice to the Buyer for the goods supplied or services rendered by Supplier 2. This process mirrors the e-invoice issuance in Step 2. Supplier 2 should not include the payment made on behalf of the Buyer in its e-invoice nor issue an additional e-invoice for it. Supplier 2 provides payment proof to the Buyer to recover the payment made to Supplier 1 on behalf of the Buyer.

     

    Real-Life Scenario for Scenario 1

    Syarikat Amani hired an event planner for their product launch on 15 November 2024. On 5 November 2024, the planner arranged for flowers from a florist, who sent an e-invoice directly to Syarikat Amani for the flowers on 10 November 2024.

    According to their contract, the event planner would pay the florist on behalf of Syarikat Amani and recover the cost later. On 12 November 2024, the event planner paid RM3,500 to the florist for the flowers.

    On 16 November 2024, the event planner sent an e-invoice to Syarikat Amani for their services. This invoice included only the service fee and other charges, excluding the RM3,500 paid to the florist. To recover the RM3,500, the event planner provided a copy of the payment proof to Syarikat Amani.

     

    Scenario 2

    In this scenario, Supplier 1 issues an e-invoice to Supplier 2 for goods sold or services rendered intended for the Buyer. Following their agreement, Supplier 2 makes payment to Supplier 1 and then issues a separate e-invoice to the Buyer, clearly itemizing the service fee and any disbursement or reimbursement.

    Steps:

        1. Agreement: Supplier 2 enters into an agreement with the Buyer to supply goods or services. As part of this arrangement, Supplier 2 agrees to pay on behalf of the Buyer for any expenses incurred during the contract period.

        1. E-Invoice Issuance: After completing a sale or transaction, Supplier 1 issues an e-invoice to Supplier 2, ensuring it meets the required fields outlined in the e-invoice guidelines and submits it for validation.

        1. Payment Settlement: Supplier 2 makes the payment to Supplier 1. In turn, Supplier 1 provides payment proof to Supplier 2 for this settlement.

        1. E-Invoice to Buyer: Supplier 2 then issues an e-invoice to the Buyer, detailing the service rendered and the amount incurred on behalf of the Buyer. This e-invoice will have separate line items for the service fee and the disbursement or reimbursement related to the expenses incurred.
       

      Real-Life Scenario for Scenario 2

      Syarikat Amani has hired an event planner for their product launch on 15 November 2024. For this event, the planner incurs RM30,000 to rent a hotel banquet hall. The hotel issues an e-invoice directly to the event planner for the rental.

      In turn, the event planner will issue an e-invoice to Syarikat Amani. This e-invoice will cover not only the service provided for organizing the event but also include the hotel rental. To ensure clarity, the event planner will present these as separate line items in the e-invoice—one for the service fee and another for the banquet hall rental. This clear breakdown helps Syarikat Amani understand the costs associated with their event, ensuring transparency and proper budgeting for future projects.

       

      Conclusion

      Understanding disbursement and reimbursement is essential for effective financial management. By clearly defining these processes and following best practices, businesses can enhance transparency and streamline operations.

       

      What’s Next?

      In our upcoming blog post, we’ll dive into Self-Billed E-Invoices, exploring their benefits, how they work, and best practices for implementation. Stay tuned to enhance your understanding of this important invoicing method!

       

      Frequently Asked Questions (FAQ)

      1. What is the difference between disbursement and reimbursement?

      Answer: Disbursement refers to expenses paid by the Buyer to a third party by the payee, while reimbursement refers to out-of-pocket expenses incurred by the payee for services rendered or goods sold, which are then reimbursed by the Buyer.

      2. Why is it important to separate line items in an e-invoice?

      Answer: Separating line items enhances transparency, making it clear what charges are for services and what are reimbursements. This helps avoid confusion and ensures accurate accounting.

      3. How should I document reimbursements and disbursements?

      Answer: Keep thorough records of all transactions, including e-invoices and payment proofs. This documentation is essential for audits and financial reviews.

      4. Can I include reimbursable expenses in my service fee invoice?

      Answer: It’s best to list reimbursable expenses as separate line items in the invoice to maintain clarity and transparency for the Buyer.

      5. What are the best practices for managing reimbursements?

      Answer: Clearly outline reimbursement policies in agreements, maintain good communication with your partners, and keep detailed records of all transactions

      E-Invoice

      Scenario 2: When the Buyer Does Not Require an E-Invoice – Consolidated E-Invoice

      When a Buyer does not require an e-Invoice, the Supplier will issue a normal receipt to the Buyer, consistent with current business practice. However, this receipt will not be submitted for IRBM’s validation since it is not an e-Invoice.

      Suppliers are allowed to aggregate transactions with Buyers who do not require an e-Invoice on a monthly basis and submit a consolidated e-Invoice to IRBM within seven (7) calendar days after the month ends.

      Before we proceed, let’s take a moment to recall the key concepts highlighted in our graphic overview. Understanding these fundamentals is crucial for navigating the e-invoicing landscape effectively.

      Now, let’s dive into a specific scenario: when a Buyer does not require an e-Invoice.

       

      How to Create a Consolidated e-Invoice:

      Suppliers have a couple of options for how to put together these consolidated e-Invoices:

          1. Separate Line Items: List each receipt as a separate line item in the consolidated e-Invoice.

          1. Continuous Receipt Numbers: Keep the receipt numbers in a continuous sequence. If there’s a break, start a new line item for the next chain.

          1. Branch-Based Submission: If the Supplier has multiple branches, they can submit consolidated e-Invoices for each branch using either of the above methods.

         

        Important Notes

        Just a heads-up: Consolidation does not apply to self-billed e-Invoices, except in the following cases:

            1. When dealing with individuals who aren’t in business

            1. For interest payments to the general public

            1. For claims or benefits from insurance companies to individuals

           

          Steps to Issue a Consolidated e-Invoice

          Where a Buyer does not require an e-Invoice, the steps involved for issuing a consolidated e-Invoice are:

              1. Step 1: Check with Buyers to see if they need an e-Invoice.

              1. Step 2: If they confirm they don’t need one, the Supplier will issue a regular receipt.

              1. Step 3: Within seven (7) days after the month ends, the Supplier should gather all the receipt details from that month and create a consolidated e-Invoice.

              1. Step 4: Make sure the consolidated e-Invoice has all the required fields as laid out in the e-Invoice Guideline.

             

            Information Required for the Consolidated e-Invoice

            Suppliers must complete the required fields outlined in Appendices 1 and 2 of the e-Invoice Guideline and include the Buyer’s details and certain transaction details, such as:

            *Note: Resource from LHDN Guideline

             

            Real-Life Scenario

            Let’s look at a practical example to make things clearer.

            CityMart Sdn Bhd is a friendly grocery chain with two branches—one in Johor Bahru and another in Kuching. In October 2025, CityMart issued regular receipts for all sales, with no e-Invoices requested. Here’s how things shaped up for them:

            • Johor Bahru Branch: 400 transactions totaling RM18,000
            • Kuching Branch: 1,500 transactions totaling RM55,000

            To follow the guidelines, CityMart prepared separate consolidated e-Invoices for each branch by 7 November 2025. They grouped their receipts into continuous sequences and listed them as line items for both branches, ensuring they included all the receipt reference numbers in the “Description” field.

            Pro Tip: Another grocery store, AllMart Sdn Bhd, decided to list each receipt as a single line item in their consolidated e-Invoices. Different approaches can work as long as they follow the guidelines!

            What’s Next?

            In our next post, we’ll dive into Disbursement and Reimbursement, where we’ll discuss how Suppliers should handle these transactions and stay compliant with the latest e-Invoice rules. Stay tuned for more helpful insights and tips!

            E-Invoice

            Understanding E-Invoicing: Transactions with Buyers

            Introduction

            In the evolving landscape of business transactions, the introduction of e-Invoicing brings new requirements for Suppliers. Currently, transactions are documented through receipts, bills, or invoices provided in hardcopy or electronically (e.g., via email). With the shift to e-Invoicing, Suppliers are now required to issue e-Invoices for all transactions.

            However, not all Buyers may need an e-Invoice. To streamline this process and reduce the administrative burden on both Suppliers and Buyers, the IRBM permits Suppliers to consolidate transactions with Buyers who do not require an e-Invoice into a single monthly e-Invoice.

            Graphic Overview:

            The graphic below illustrates two scenarios for handling transactions with Buyers:

                1. Scenario 1: Buyer Requests an E-Invoice

                1. Scenario 2: Buyer Does Not Require an E-Invoice

              Note: This graphic is based on information from the LHDN’s e-Invoicing Guidelines.

              Scenario 1: Buyer Requests an E-Invoice. We’ll cover the steps involved, the necessary fields for the e-Invoice, and provide an example to ensure you understand how to comply with this requirement.

               Scenario 1 : Buyer Requests an E-Invoice

              1. Request for E-Invoice:

              If a Buyer needs an e-Invoice for a transaction, they should let the Supplier know by making a request.

              2.Collecting Buyer’s Details:

              Once the Supplier gets the request, they need to gather specific details from the Buyer.

              3. Issue the E-Invoice:

              Once the Supplier has collected the necessary details from the Buyer, they can proceed to issue the e-Invoice. Below are the steps to issue the E-Invoice. 

              Steps To Issue the E-Invoice 

              Step 1: Confirm with the Buyer if they indeed need an e-Invoice.

              Step 2: If the Buyer confirms, they must provide the necessary details to the Supplier to complete the e-Invoice

              Step 3: The Supplier fills out the remaining fields as specified in Appendices 1 and 2 of the e-Invoice Guidelines and issues the e-Invoice.

              Step 4: Once validated, the e-Invoice serves as the Buyer’s official proof of expense for tax purposes.

              Note: For detailed guidelines, refer to Table 3.1 and Appendices 1 and 2 in the e-Invoice Guidelines .

               

              Details and Fields to be Provided by the Supplier for Issuing an E-Invoice

              To successfully issue an e-Invoice, the Supplier must gather and provide the following details and fields:

               

              Real Life Scenario:

              Mr. Adam (Buyer) bought a laptop from Tech Innovations Ltd. (Supplier) for RM1,200 and requested an e-Invoice.

              Tech Innovations Ltd. asked Mr. Adam for his personal details to issue the e-Invoice. Mr. Adam provided all the necessary details, including his identification number, but did not provide his Tax Identification Number (TIN).

              Even without Mr. Adam’s TIN, Tech Innovations Ltd. was able to issue the e-Invoice. Once Mr. Adam receives the validated e-Invoice, he can use it as proof of expense for tax purposes.

              What’s Next?

              In the next post, we’ll explore Scenario 2: When the Buyer Does Not Require an E-Invoice. We’ll discuss how Suppliers can manage such transactions and the steps to consolidate them into a single e-Invoice. Stay tuned for a detailed guide on how to streamline your invoicing process efficiently! 

              E-Invoice

              Welcome to Our E-Invoicing Guidelines Series!

              E-invoicing is an essential component of modern business operations, offering efficiency and compliance in financial transactions. As more businesses adopt electronic invoicing, understanding the guidelines becomes crucial. In this series, we will explore various aspects of e-invoicing to help you navigate the requirements effectively.

              What We’ll Cover:

              1. Transactions with Buyers
              Learn how to handle e-invoicing when dealing with buyers. We’ll cover different scenarios, including the necessary steps and requirements for issuing e-invoices.

              2. Disbursement and Reimbursement
              Understand the procedures for e-invoicing related to disbursements and reimbursements. We’ll provide insights into ensuring compliance and streamlining these financial processes.

              3. Self-Billed E-Invoice
              Discover when and how to use self-billed e-invoices. This post will guide you through the conditions and steps involved in creating self-billed invoices.

              4. Cross-Border Transactions
              Explore the complexities of e-invoicing for international transactions. We’ll discuss how to manage cross-border invoicing, including handling currency differences and regulatory compliance.

              5. E-Commerce Transactions
              Get practical tips for managing e-invoicing in the context of e-commerce. Learn how to integrate e-invoicing into your online sales processes effectively.

              Stay Tuned!

              Our first detailed post will focus on “Transactions with Buyers”. In this post, we’ll dive into the specifics of issuing e-invoices when a buyer requires them. Read the full post here.

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              Stay updated with the latest posts in this series by subscribing to our blog. Don’t miss out on any of our comprehensive e-invoicing guidelines!

              E-Invoice

              E-Invoicing Secrets: What You Didn’t Know and Why It Matters

              Introduction

              E-invoicing is revolutionizing the way businesses handle invoices in Malaysia. While it may seem like just a regulatory requirement, e-invoicing offers transformative benefits that extend far beyond compliance. From substantial cost savings to enhanced operational efficiency, e-invoicing can significantly impact your business. In this article, we’ll uncover the hidden advantages of e-invoicing and explain why it’s a critical component for modernizing your business operations.

              1. Beyond Compliance: The True Power of E-Invoicing

              E-invoicing is more than a regulatory obligation; it’s a powerful tool for improving business efficiency. According to a report by Basware, companies that adopt e-invoicing can reduce invoice processing costs by up to 60%. This is achieved through automation, which minimizes manual data entry errors and accelerates the processing time. Additionally, the Malaysian Digital Economy Corporation (MDEC) reports that businesses transitioning to e-invoicing experience a significant reduction in payment delays and disputes, contributing to better cash flow management.

              2. Integration Magic: How E-Invoicing Enhances Your Existing Systems

              E-invoicing solutions integrate seamlessly with existing Enterprise Resource Planning (ERP) systems, enhancing overall operational efficiency. By automating invoice matching and approval processes, businesses can streamline their operations and reduce the time spent on manual tasks. A study by Deloitte found that 78% of organizations using e-invoicing see a noticeable improvement in their financial operations. This integration also helps in maintaining accuracy and compliance with the Lembaga Hasil Dalam Negeri (LHDN) requirements in Malaysia.

              3. Data Insights: The Unexpected Advantages

              One of the most valuable benefits of e-invoicing is the data insights it provides. E-invoicing platforms generate detailed reports and analytics that offer a clearer picture of spending patterns and financial performance. PwC highlights that businesses using e-invoicing can leverage this data to make informed decisions, optimize their procurement processes, and identify opportunities for cost savings. The ability to analyze invoice data in real-time also supports better financial planning and forecasting.

              4. Cost Savings You Didn’t Expect

              The cost savings associated with e-invoicing extend beyond reduced processing costs. According to a KPMG report, businesses that switch to e-invoicing can save on expenses related to paper, postage, and storage. The report estimates that companies can achieve a return on investment (ROI) of up to 300% by implementing e-invoicing solutions. Furthermore, e-invoicing reduces the risk of errors and fraud, leading to additional cost savings through improved accuracy and security.

              5. Future-Proofing Your Business with E-Invoicing

              E-invoicing is not just about immediate benefits; it also prepares your business for the future. As digital transformation continues to evolve, adopting e-invoicing helps businesses stay ahead of regulatory changes and technological advancements. APQC reports that organizations embracing e-invoicing are better equipped to handle future trends such as artificial intelligence and blockchain, which are expected to further enhance invoicing processes.

              Conclusion

              E-invoicing offers far more than just compliance benefits. By integrating e-invoicing into your operations, you can achieve significant cost savings, streamline processes, and gain valuable data insights. As e-invoicing becomes increasingly vital for business efficiency and future readiness, now is the time to embrace this transformative solution. Interested in learning more or seeing e-invoicing in action? Contact us today to schedule a demo and see how e-invoicing can revolutionize your business!

              References:

                  • Deloitte Malaysia

                  • PwC Malaysia

                  • KPMG Malaysia

                  • Basware Malaysia

                  • EY Malaysia

                E-Invoice

                7 E-Invoicing Mistakes Malaysian Businesses Must Avoid in 2024

                Introduction

                As Malaysia continues to roll out mandatory e-invoicing requirements for businesses in 2024, it’s crucial to be aware of common pitfalls that could hinder compliance and efficiency. E-invoicing, while offering numerous benefits, also presents challenges that businesses must navigate carefully. Here are seven common mistakes to avoid when implementing e-invoicing for your business in Malaysia:

                1. Inadequate System Integration

                One of the most significant challenges in e-invoicing is ensuring that your existing ERP or accounting system is fully integrated with e-invoicing platforms. Failure to do so can result in data discrepancies and delays. Make sure your system is compatible with the e-invoicing standards and platforms mandated by Malaysian regulations.

                Resource: Malaysian Inland Revenue Board – E-Invoicing Updates

                2. Ignoring Compliance Requirements

                E-invoicing in Malaysia comes with specific compliance requirements, including format standards and tax regulations. Ignoring these requirements can lead to penalties and legal issues. Stay updated on the latest guidelines and ensure your e-invoicing solution adheres to them.

                Resource: Malaysian E-Invoicing Guidelines

                3. Overlooking Data Security

                Handling sensitive financial information electronically requires robust security measures. Many businesses underestimate the importance of data protection, risking data breaches and fraud. Implement strong security protocols and ensure your e-invoicing provider prioritizes data security.

                4. Failing to Train Staff

                Transitioning to e-invoicing can be challenging if your team is not properly trained. Inadequate training can lead to errors and inefficiencies. Invest in comprehensive training programs for your staff to ensure they are well-versed in the new processes and technologies.

                5. Not Testing the System Thoroughly

                Before fully adopting e-invoicing, it’s essential to test the system extensively. Skipping this step can result in unforeseen issues once the system is in full operation. Conduct thorough testing and address any issues before going live.

                6. Neglecting Integration with Business Partners

                E-invoicing effectiveness depends on seamless integration with your business partners’ systems. If your partners are not equipped for e-invoicing, it can cause disruptions. Coordinate with your partners to ensure they are prepared for the transition.

                Resource: E-Invoicing Integration Strategies

                7. Ignoring Ongoing Compliance Monitoring

                E-invoicing regulations and technology are constantly evolving. Failing to monitor and adapt to these changes can lead to compliance issues. Regularly review your e-invoicing processes and stay informed about any updates or changes in regulations.

                Resource: Continuous Compliance for E-Invoicing

                Conclusion

                Implementing e-invoicing is a significant step for businesses in Malaysia, offering numerous benefits like improved accuracy and compliance. However, avoiding common mistakes is crucial to ensure a smooth transition. By being aware of these pitfalls and taking proactive steps, you can enhance your invoicing process and avoid costly errors.

                Ready to get started with e-invoicing? At Smritram Infotech, we offer tailored solutions to help you navigate this transition seamlessly. Contact us today for a demo or consultation, and let’s ensure your e-invoicing process is both efficient and compliant. Don’t wait—take action now to set your business up for success!

                Feel free to share this post with your network and let us know if you have any questions or need further assistance!

                FAQ: E-Invoicing in Malaysia

                 

                1. What happens if I make mistakes with e-invoicing?

                Mistakes in e-invoicing can lead to fines, legal problems, or payment delays. Errors in your invoices might also increase your admin work and affect your relationships with business partners. It’s important to get things right to avoid these issues.

                2. How can automation help avoid errors in e-invoicing?

                Automation reduces errors by taking over manual data entry, which is often prone to mistakes. Automated systems handle invoice data more accurately and quickly, making the whole process smoother and reducing the chance of errors.

                3. Why is a digital signature important for e-invoicing?

                A digital signature confirms that an invoice is genuine and hasn’t been altered. It ensures that the sender is verified and adds an extra layer of security to protect against fraud.

                4. What should I do if my e-invoice gets rejected?

                If your e-invoice is rejected, check the reason given by the system. Common issues might be formatting mistakes or incorrect data. Fix the problems, and resend the invoice. It’s also a good idea to contact the recipient to ensure everything is correct.

                5. How can Smritram Infotech’s e-invoicing solution help me?

                Smritram Infotech offers an e-invoicing solution that makes invoicing easier and ensures you meet Malaysian regulations. Our system works well with your existing tools and has strong security features. We also provide support, including training and demos, to help you get started. With our solution, you’ll save time, avoid errors, and make your invoicing process more efficient.