Introduction:

In the rapidly evolving world of B2B transactions, e-invoicing has become a cornerstone of efficient operations in Malaysia. However, not all e-invoices are accepted at first submission. Understanding the reasons behind e-invoice rejections and cancellations is crucial for maintaining smooth business operations. This blog delves into the key reasons for these issues and provides practical strategies to avoid them.

Understanding the E-Invoicing Process:

Before diving into the reasons for rejections and cancellations, it's essential to grasp the e-invoicing process in Malaysia. The process typically involves creation, validation, notification, and sharing of the e-invoice. Each step must be meticulously followed to ensure compliance with regulatory standards.

Common Reasons for E-Invoice Rejections:

• System and Portal Rejections:
  • Structural Non-Compliance: E-invoices must adhere to the prescribed format and hierarchy. Deviations can lead to automatic rejections.
  • Incomplete or Incorrect Core Fields: Missing or erroneous data in mandatory fields, such as Tax Identification Number (TIN) or product descriptions, can cause rejections.
  • Invalid Digital Signatures: Ensuring the authenticity and integrity of the invoice through valid digital signatures is paramount.
• Buyer-Initiated Rejections:
  • Discrepancies in Details: Mismatch in items, quantities, or supplier details can lead to rejection.
  • Unapproved Charges: Inclusion of unauthorized fees not agreed upon in the contract is a common reason for rejection.
  • Mismatch in Agreed Terms: Differences in price, discounts, or payment terms compared to the agreed contract can cause issues.
• Supplier-Initiated Cancellations:
  • Error in Invoice Details: Suppliers may cancel invoices due to mistakes in pricing, quantities, or other details.
  • Duplicate Invoices: Accidental issuance of duplicate invoices for the same transaction can lead to cancellation.
  • Regulatory Compliance: Non-compliance with regulatory requirements or changes in tax laws may necessitate cancellation.

Process for Rejection or Cancellation:

• Buyer's Rejection Request: Within 72 hours of validation, buyers can request rejection, specifying the reason. Suppliers must act on these requests if they agree with the justification.
• Supplier's Cancellation: Suppliers can cancel within 72 hours if errors are identified, providing valid justifications.

Strategies to Minimize Rejections and Cancellations:

1. Training and Awareness: Ensure all stakeholders are trained on e-invoicing regulations and best practices.
2. Robust Systems: Implement reliable billing and ERP systems that automate data handling and reduce manual errors.
3. Pre-Submission Checks: Conduct thorough checks to ensure compliance with regulatory requirements.
4. Clear Communication: Confirm details with buyers before submission to address any discrepancies.
5. Leverage Technology: Use software tools that flag potential issues before submission.

Conclusion:

By understanding the reasons for e-invoice rejections and cancellations and implementing strategies to avoid them, businesses can streamline their operations and enhance their B2B transactions in Malaysia. Stay informed, compliant, and proactive to ensure seamless e-invoicing processes.