In today's digital age, e-invoicing is revolutionising how businesses handle transactions. As companies strive for greater efficiency and accuracy, Peppol e-invoicing stands out as a game-changer, especially for businesses in Malaysia. This article delves into Peppol e-invoicing, exploring its benefits, set-up process, and significance in the Malaysian business landscape. For more information, refer to E-Invoicing in Malaysia: A Comprehensive Guide for 2024.
In Malaysia, MDEC acts as the Peppol Authority. Peppol Service Providers are instrumental in maintaining connectivity gateways on the e-Invoicing network, ensuring compliance with Peppol standards, directing e-Invoices to the correct destination APs, and managing participant details within the Malaysia SMP.
The Ministry of Communications and Digital, in collaboration with the Malaysia Digital Economy Corporation (MDEC), is introducing the National E-Invoicing Initiative to modernise and standardise the exchange of invoices among Malaysian businesses. This initiative will establish a framework for interoperable e-invoicing tailored to local needs, nurture local service providers, and encourage widespread adoption of e-invoicing practices.
It complements the e-invoicing system implemented by the Inland Revenue Board for tax purposes and aims to enhance efficiency, security, and cross-border data exchange while promoting environmental sustainability. As part of the 12th Malaysia Plan, MDEC has implemented this initiative using the Peppol framework to ensure seamless interoperability across different e-procurement and ERP systems, as the New Straits Times reported on 1st November 2023.
1. What is Peppol E-Invoicing?
Peppol (Pan-European Public Procurement Online) is a standardised framework that facilitates the secure exchange of electronic documents, such as invoices, between businesses and government entities across Europe and beyond. It helps to simplify cross-border procurement and streamline transactions. Peppol's e-invoicing system is known for its interoperability, ensuring different systems can communicate seamlessly. Key features of Peppol e-invoicing include standardised document formats, secure communication channels, and a network of certified service providers known as Peppol Access Points. Check out Peppol Solution and Service Providers in Malaysia on the List of Peppol-Ready Solution Providers and List of Service Providers from MDEC.
2. What Is Peppol International Invoice (Pint)?
According to MDEC, the Peppol International Invoice (PINT) is a new specification designed to enable the seamless exchange of invoices within the Peppol Network on a global scale. Derived from the Peppol BIS Billing 3.0 specification, PINT is structured to adhere to EN 16931 standards and promote interoperability among countries. You may also check out about PINT BIS Malaysia Billing process 1.0 and PINT BIS Malaysia Self Billing process 1.0.
Below is the table summarising the e-invoicing formats and platforms, including PEPPOL, utilised by the most technologically advanced countries about e-invoicing from Storecove.
| Country | Mandatory to receive & send | E-invoicing platforms | E-invoicing format | Number of Peppol IDs |
| Australia | Yes | Peppol | PEPPOL BIS 3.1 ANZ | 23436 |
| Austria | Yes | - Peppol - USP | - PEPPOL BIS - ebInterface | 105 |
| Belgium | Yes | - Peppol - Mercurius | PEPPOL BIS V3 | 55756 |
| Croatia | Yes (to receive) | - Peppol - Servis eRačun za državu | - PEPPOL BIS V3 - OASIS UBL 2.1 - CII | 15 |
| Cyprus | Yes (to receive) | Peppol | PEPPOL BIS Billing 3.0 | 143 |
| Denmark | Yes | -Peppol -NemHandel | - Peppol BIS V3 (PEPPOL) - OIOUBL (NemHandel) | 38131 |
| Estonia | Yes | -Peppol -Billberry -Finbite -Unified Post -E-arveldaja | -EVS 923 - UBL | 688 |
| Finland | Yes | - Peppol - Post Network Service | - Finvoice 3.0 - TEAPPSXML 3.0 | 6896 |
| France | Yes | - Peppol - Chorus Pro | - OASIS UBL 2.1 - Peppol BIS V3 - CII UN/CEFACT - Factur-X / EDI / XML - EX PIVOT S Format | 695 |
| Germany | Yes | - Peppol E-Rechnungs-Portal | - ZUGFeRD 2.0 (B2B) - XRechnung (B2G) | 975 |
| Iceland | Yes | Peppol | EN16931 CIUS | 2845 |
| Ireland | Yes(to receive) | Peppol | - PEPPOL BIS - UBL - EDIFACT | 245 |
| Japan | No | - Peppol (in development) | PINT (Peppol BIS V3) | - |
| Latvia | Yes (To receive) | - Peppol - latvija.lv - eAddress (for government bodies). | -UBL 2.1 -XML | 36 |
| Lithuania | Yes | -Peppol -eSaskaita | - PEPPOL AS4 - XML - UBL v2.1 | 44 |
| Luxembourg | Yes | Peppol | -PEPPOL BIS - UBL v2.1 | 551 |
| Malaysia | Yes | Peppol (in development) | In development | - |
| Malta | Yes | Peppol (in development) | -European standards | 217 |
| Netherlands | Yes | - Peppol - Digipoort | - PEPPOL BIS - NLCIUS - UBL-OHNL - SI-UBL | 30560 |
| New Zealand | No | Peppol | PEPPOL BIS 3.1 ANZ | 1757 |
| Norway | Yes | Peppol | - PEPPOL BIS Billing - UBL | 246439 |
| Poland | Yes(to receive) | -PeF -KSeF | - PEPPOL BIS Billing 3.0 - UBL v2.1 - UN/CEFACT CII | 7920 |
| Singapore | No | Peppol | PEPPOL BIS 3.0 SG | 51835 |
| Slovenia | Yes (to receive) | PPA | e-SLOG | 2731 |
| Sweden | Yes | Peppol | - PEPPOL BIS Billing 3.0 - Svefaktura v1 - SFTI Fulltextfaktura | 67301 |
| United Kingdom | Yes (only to NHS) | Peppol PECOS P2P | - EDI - XML - UN/CEFACT - UBL - Comma-delimited ASCII | 2 |
3. How Peppol E-Invoicing Works?
The Peppol framework is globally recognised and facilitates interoperability between different eProcurement solutions or ERP systems, ensuring seamless exchange of e-invoices. Additionally, to comply with tax reporting requirements set by the Inland Revenue Board Malaysia (IRBM), specific service providers (SPs) within the Peppol Network will submit only the required IRBM fields for tax reporting purposes. Once validated by the IRBM, these e-invoices are combined with the original commercial e-invoices and transmitted to the customer to complete the transaction. For more information, check out Peppol Malaysia Electronic Invoicing Document Specifications.
4. Four Essential Steps to Set Up Peppol E-Invoicing for Your Business
Here, we outline four essential steps to guide you through the set-up process, ensuring a seamless transition and maximising the benefits of e-invoicing for your operations.
i) Choosing a Peppol Access Point Provider
Select a certified service provider in Malaysia to facilitate the secure exchange of documents within the Peppol network. For instance, businesses can select a Peppol Access Point provider that integrates seamlessly with their ERP system. This enables them to adapt quickly to the new invoicing standards that align with tax compliance.
Here are certified Peppol service providers in Malaysia that you can consider:
a. Tickstar
b. Storecove
c. Beacon X
ii) Integration with Existing ERP Systems
Work with your IT team or an external consultant to integrate Peppol's capabilities with the technical specifications of your current ERP system. This will ensure seamless data exchange, automate invoicing and reduce administrative overhead.
iii) Testing and Validation
Before going live, thoroughly test the system to ensure all components work correctly and meet the Peppol e-Invoicing standard. For example, businesses can test their Peppol e-invoicing setup with a few select clients to ensure smooth transactions before fully rolling out the system across all projects.
iv) Addressing Common Challenges
Businesses may face data format discrepancies and system compatibility issues. These can be mitigated by choosing a reputable access point provider and seeking expert advice during integration. Whereby businesses can troubleshoot data discrepancies during the initial stages of Peppol e-invoicing implementation, ensuring accurate message formats and consistent data exchange.
5. Four Key Benefits of Peppol E-Invoicing for Malaysian Businesses
Discover the transformative power of Peppol E-Invoicing for Malaysian businesses. In this guide, we highlight four key benefits that await businesses embracing this innovative invoicing solution.
- Improved Efficiency and Cost Savings
Automating the invoicing process reduces manual handling, reducing processing time and costs. For example, businesses that adopted Peppol e-invoicing reduced invoicing processing time by 70% and saved significant costs on paper and administrative resources.
- Enhanced Accuracy and Reduced Errors
Standardised formats and automated validation checks with multifactor authentication minimise the risk of errors. Distributors can experience a drastic reduction in invoice errors and supplier disputes, leading to better business relationships and smoother operations.
- Faster Payment Cycles and Improved Cash Flow
Electronic processing speeds up invoice approval and payment cycles, enhancing cash flow management. Businesses can receive payments faster by switching to Peppol e-invoicing, which improves their cash flow and financial planning.
- Compliance and Reduced Risk of Fraud
Peppol's secure network ensures compliance with regulatory standards and reduces the risk of fraudulent transactions. For instance, businesses can strengthen their compliance and security monitoring measures by using Peppol e-invoicing, reducing the risk of invoice fraud and enhancing trust with clients.
Conclusion
Peppol e-invoicing is revolutionising business transactions in Malaysia, offering many benefits, from improved efficiency to enhanced compliance. Businesses can seamlessly integrate this powerful tool into their operations by following the outlined steps for business digitalisation. As Malaysia continues to advance in its digital transformation journey, adopting Peppol e-invoicing is not just a strategic move but a necessary one for sustained growth and competitiveness.
