E-Invoicing Mistakes That Could Get Your Business in Trouble
Key Takeaways
👉Wrong invoice format leads to automatic rejection: LHDN only accepts XML or JSON formats following Peppol BIS Billing 3.0 specifications, PDFs and other formats may not meet the submission requirement and could result in rejection.
👉Missing or incorrect mandatory fields cause validation failures: Malaysia’s e-invoice requires 55 mandatory fields including accurate TIN, addresses, and tax amounts, any errors trigger immediate rejection.
👉Data mismatches between systems create compliance risks: Inconsistent customer records, business registration numbers, or item codes across your systems are top causes of failed submissions.
👉Missing the 72-hour correction window means extra work: After LHDN validates your e-invoice, you have only 72 hours to cancel or correct errors. After that, you must issue credit notes or debit notes.
👉Manual processes increase error rates dramatically: Businesses relying solely on manual data‑entry via the MyInvois portal may be at greater risk of errors compared to those with automated API integration with accounting systems.
Introduction
Malaysia’s e-invoicing mandate is now in full swing. Phase 1 businesses (over RM100 million turnover) started in August 2024, Phase 2 (RM25-100 million) began January 2025, and Phase 3 (RM5-25 million) started July 2025. With penalties under Section 120(1)(d) of the Income Tax Act 1967 for non-compliance, getting e-invoicing right isn’t optional.
Many businesses are making costly mistakes during implementation that lead to invoice rejections, payment delays, and potential LHDN penalties. According to implementation data, incorrect data entry and format errors are the leading causes of e-invoice failures across Malaysian businesses. This guide reveals the most common e-invoicing mistakes businesses make and shows how to avoid them, before they cost you money and compliance headaches.
Mistake 1: Using Incorrect Invoice Formats
LHDN’s MyInvois system only accepts e-invoices in XML or JSON formats that follow Peppol BIS Billing 3.0 specifications. Many businesses mistakenly assume PDFs, Word documents, or JPEGs qualify as e-invoices.
The system performs real-time validation, checking your invoice structure and format before accepting it. Submit the wrong format, and you’ll face immediate rejection. This isn’t just a technical issue, it’s a compliance failure that can delay your entire invoicing cycle.
Ensure your accounting software or e-invoicing solution generates invoices in the correct XML or JSON format. If using the MyInvois portal manually, familiarize yourself with the required format specifications in LHDN’s e-Invoice Specific Guideline Version 4.4. Better yet, work with an accounting service in Johor Bahru that has experience implementing compliant e-invoicing systems.
Mistake 2: Incomplete or Inaccurate Mandatory Fields
Malaysia’s e-invoice requires 55 mandatory fields. Missing even one triggers system rejection. Common errors include incorrect Tax Identification Numbers (TIN), wrong business addresses, missing product descriptions, incorrect tax calculations, and improper currency codes.
The MyInvois system validates each field in real-time. Inaccurate supplier or buyer details, especially TIN mismatches between your records and LHDN’s database, are among the top rejection causes reported by businesses in Phase 1 and Phase 2 implementation.
Conduct a comprehensive data audit before your implementation date. Verify all customer TINs against LHDN records, standardize address formats, and ensure your product/service codes are complete and accurate. Implement data validation scripts that catch errors before submission. An experienced accounting service in Johor Bahru can help audit your master data and set up validation checkpoints.
Mistake 3: Poor Master Data Management
When customer, supplier, and product data exist in multiple spreadsheets or disconnected systems, errors are inevitable. Inconsistent business registration numbers, outdated addresses, or varying item codes across different databases lead to failed e-invoice submissions.
Businesses often discover these data quality issues only after invoices are rejected by the MyInvois system. By then, you’re dealing with payment delays and frustrated customers.
Centralize your master data in one authoritative system. Implement automatic data synchronization between your ERP, accounting software, and e-invoicing platform. Use data validation rules that prevent invoice creation if critical information is missing or incorrectly formatted. This is where professional accounting services prove invaluable, we may implement proper data governance before your mandatory e-invoicing date.
Mistake 4: Missing the 72-Hour Correction Window
After LHDN validates your e-invoice and issues a Unique Identification Number (UIN) and QR code, you have exactly 72 hours to cancel or correct any mistakes. Within this window, you can cancel the e-invoice and reissue a corrected version.
After 72 hours pass, you cannot cancel the original invoice. Any corrections require issuing adjustment documents such as credit notes for reducing invoice values, debit notes for increasing amounts, or refund notes for returned payments. This creates additional administrative work and complicates your records.
Implement a review process immediately after invoice validation. Assign team members to verify validated invoices within 24 hours of issuance, checking all amounts, tax calculations, and customer details. Set up automated alerts when invoices are validated so corrections can be made quickly if needed.
Mistake 5: Relying Solely on Manual Processes
The MyInvois portal allows manual data entry, which is suitable for small businesses with low transaction volumes. However, manual entry dramatically increases error risk. Typing 55 fields manually for each invoice invites mistakes in TIN numbers, amounts, dates, and tax calculations.
Businesses in Phase 1 implementation reported significantly higher rejection rates when using manual entry compared to automated API integration. Manual processes also don’t scale. As your business grows, manual e-invoicing becomes a bottleneck.
To avoid this , suggest investing in API integration between your accounting system and MyInvois. This automates data transfer, reduces manual entry errors, and speeds up processing. Modern accounting software like Xero, SQL Accounting Cloud, or QuickBooks Online can integrate with e-invoicing middleware. Also, an accounting service in Johor Bahru can assess your current systems and recommend the right integration approach for your business size and transaction volume.
Mistake 6: Ignoring QR Code Requirements
After LHDN validates your e-invoice, they provide a unique QR code that must be embedded on your invoice before sending it to the buyer. This QR code acts as proof of authenticity, allowing recipients to verify the invoice directly through LHDN’s MyInvois portal.
Forgetting to include the QR code, using an incorrect one, or reusing it from another invoice can lead to non-compliance issues and payment delays, as buyers will not be able to confirm its validity.
To stay compliant, ensure your e-invoicing system automatically embeds the correct QR code after validation. If using manual processes, implement a checklist that verifies QR code inclusion before invoice distribution. Never reuse QR codes from previous invoices, each validated invoice receives a unique code.
Mistake 7: Inadequate Staff Training
E-invoicing represents a significant operational change. Staff who don’t understand the new requirements make preventable mistakes like submitting wrong formats, missing mandatory fields, or failing to follow the 72-hour correction process.
Many businesses underestimate the training needed. Employees accustomed to traditional invoicing must learn new workflows, understand validation processes, and know how to handle rejections and cancellations.
Invest in comprehensive training before your mandatory implementation date. Ensure everyone involved in invoicing, accounting, and financial reporting understands e-invoicing requirements, the MyInvois system, and your company’s specific workflows. Consider engaging an accounting service in Johor Bahru that provides hands-on training and ongoing support during the transition period.
Conclusion
E-invoicing compliance in Malaysia is essential. With LHDN’s phased rollout progressing through 2025 and 2026, businesses must prepare properly to avoid costly mistakes. The seven errors outlined here, such as wrong formats, incomplete fields, poor data management, missed correction windows, manual processes, QR code issues, and inadequate training, account for the majority of e-invoice failures.
The consequences extend beyond administrative hassles. Invoice rejections delay payment cycles, strain customer relationships, and expose your business to penalties under the Income Tax Act 1967. As enforcement tightens after the six-month relaxation periods end, compliance becomes even more critical.
Partnering with an experienced accounting service in Johor Bahru ensures your e-invoicing implementation is done right from the start. Professional accountants can audit your data, integrate compliant systems, train your team, and provide ongoing support to keep you compliant as regulations evolve.
Don’t wait until your mandatory date arrives. Start preparing now, avoid these common mistakes, and ensure your business transitions smoothly to Malaysia’s digital invoicing future.