Finexus solving e-Invoicing issues for MSMEs

Micro, small, and medium-sized enterprises (MSMEs) represent a remarkable 96.9% of all businesses in Malaysia as of 2023. Among the 1,101,725 MSMEs, a significant 69.7% are micro-sized businesses, highlighting their critical role as a driving force in the Malaysian economy. 

Despite a positive year-on-year growth in 2023 — where MSMEs contributed 39.1% to the economy, 12.2% to exports, and 48.5% to employment — they still face challenges in maintaining this growth momentum. These challenges include impediments in the financial sector and inabilities in scaling up, as highlighted in the Mid-Term Review of the Twelfth Malaysia Plan. 

Indeed, although Budget 2024 has earmarked RM44 billion for loans and financing facilities for MSMEs, many still struggle to secure loan approvals due to incomplete financial reporting. This gap in financial documentation also complicates and limits the allocation of funds by disbursement agencies, which may explain the drop in the number of micro-sized enterprises from 923,667 in 2022 to 767,421 in 2023. Conversely, small-sized and medium-sized enterprises saw increases of 35.8% and 7.9%, respectively, likely due to better access to funding through sufficient financial reporting.  

Therefore, the introduction of e-Invoicing could help bridge these financial reporting gaps, particularly for micro-sized enterprises, by providing clear records of business revenues, thereby making it easier for them to access loans and financing facilities. 

Moreover, while MSMEs earning less than RM150,000 annually are not required to issue e-Invoices to customers, SAMENTA shared that those involved in the supply chains of larger companies are still expected to issue e-Invoices to complete the continuous transaction control (CTC) process or risk being delisted as vendors. In other words, no business is exactly exempted from e-Invoicing to remain competitive in the market, especially as these micro-sized SMEs grow and enter the above RM150,000 revenue bracket.  

To address these challenges, the government has introduced an interim relaxation period from July 1, 2025, to December 31, 2025 for companies to transition gradually into e-Invoicing. This period also provides MSMEs with time to identify e-Invoicing providers that meet the following criteria: 

1. Seamless and Cost-Effective: The solution must integrate smoothly into daily operations, especially for retail MSMEs serving walk-in customers. An ideal solution is a POS system with built-in e-Invoicing capabilities, eliminating the need for additional e-Invoicing devices. Finexus offers a comprehensive POS cum e-Invoicing solution that includes payment gateways, DuitNow QR standees, EDC, mini POS, QR sound boxes, and vending machines.  

2. Compliant: The solution should include an automated verification to ensure 100% compliance with LHDN e-Invoicing regulations, thereby preventing heavy penalties and fines. Finexus’ POS will not generate an e-Invoice until all required information is accurately provided, minimising the risk of non-compliance — a major concern recently expressed by 56% of SMEs. Penalties for non-compliance can include fines ranging from RM200 to RM20,000 and/or imprisonment for up to six months. 

3. Efficient: The solution must also be able to handle high volumes of walk-in customers without causing delays in queues. Finexus’ POS app generates a dynamic e-Invoicing QR code after payment, enabling customers to scan the QR and privately enter their details on the Finexus website or app at their convenience. Required details from the customer to generate an e-Invoice include his or her ID number (e.g., NRIC, Passport, BRN, Army Number), name, tax identification number (for Malaysians), residential address, and contact number. 

4. Easy to learn: The solution should be user-friendly, even for elderly or less tech-savvy merchants. Ideally, the POS system should come preloaded with the merchant’s e-Invoicing information required by LHDN (such as merchant classification codes, product details, unit prices, and signatures) to issue an e-Invoice. The Finexus POS offers this preloaded feature along with an intuitive product category menu for quick selection of customer’s order to generate an e-Invoice. Additionally, for MSMEs with multiple branches, Finexus allows restricted access to e-Invoicing information by branches and companies. 

5. Secure: The solution must protect customers’ information from data breaches. Finexus operates two fully owned, secure data centres in Kuala Lumpur and Cyberjaya, offering bank-grade security to store customers’ e-Invoicing data for seven years. These data centres are accredited by global standards, including PCI DSS Level 1, Tier 3, and ISO 27001. 

“Although 78% of SMEs have expressed concerns about being less than 50% prepared for e-Invoicing implementation, we are more than ready to address these concerns by offering an easy, affordable, and secure POS solution with e-Invoicing capabilities for walk-in customers. 

“In addition, we can also enable POS and e-Commerce solution providers in Malaysia to offer these e-Invoicing features to their customers as well, facilitating faster e-Invoicing digitalisation for all MSMEs in Malaysia,” said Clement Loh, Group CEO of Finexus. 

For more information on Finexus’ e-Invoicing solutions for MSMEs, visit https://www.finexusgroup.com/arema/

This content is provided by Finexus SDN BHD.

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