Manufacturing is the backbone of the Malaysian economy. From small-scale food producers to component fabricators and contract manufacturers. But running a manufacturing business isn’t easy. Cash flow is often tied up in raw materials, equipment, and long production cycles, while payment collection may take months.
Now that the Inland Revenue Board of Malaysia (IRBM) is rolling out mandatory e-invoicing, manufacturing companies need to prepare for new compliance obligations. This guide breaks down how e-invoicing affects the industry, the types of transactions involved, and how SMEs can manage the costs and cash flow impact of this shift.
Comprehensive Guide to E-invoicing in Malaysia
What is E-Invoicing in the Context of Manufacturing?
E-invoicing is the digital issuance, validation, and submission of invoices through the IRBM’s MyInvois system. From 1 July 2025 (or earlier if revenue thresholds apply), all manufacturing businesses — including food manufacturers — must issue e-invoices for all business income and expenses.
This includes:
- Component and equipment manufacturers
- Small-scale food manufacturing companies
- Contract manufacturers and OEMs
- Packaging and processing facilities
- Raw material suppliers
Even if you only serve B2B clients or export markets, e-invoicing compliance still applies.
Manufacturing Transactions That Require E-Invoices
Manufacturing businesses must issue e-invoices for both income and expense transactions to comply with IRBM’s requirements. This applies whether you’re dealing with domestic clients, export markets, or upstream/downstream suppliers.
| Income Transactions | Expense Transactions |
| Product sales (domestic and international) | Raw material and component purchases |
| Packaging, assembly, or labelling services | Equipment leasing, maintenance, or repairs |
| Contract manufacturing for third-party brands | Rental of warehouse or production space |
| Milestone-based billing for custom production | Labour costs, outsourced services, and utilities |
| Internal transfers billed across departments or subsidiaries | Insurance, freight, and logistics charges |
E-invoices are required not just for full payments, but also for progressive billing — such as deposits, staged milestone payments, or final delivery-based invoices.Always match your billing schedule to your production cycle to avoid issuing e-invoices prematurely or incompletely.
For the latest breakdown of transaction types and billing methods, you can refer to IRBM’s General e-Invoicing FAQ for manufacturing-relevant scenarios.
Common E-Invoicing Scenarios in Manufacturing
E-invoicing doesn’t just apply to final product sales — it covers every part of your manufacturing process where income or expenses are recorded. Here’s how some common scenarios are handled:
B2B Product Sales
An e-invoice must be issued for each confirmed order, whether it’s for a small batch or high-volume production. This applies to both local clients and overseas buyers. For international clients, the invoice must follow cross-border e-invoicing rules set by IRBM.
Progressive or Milestone Billing
Manufacturers who bill in phases — for example, 30% upfront and 70% upon delivery — must issue a separate e-invoice for each payment. This helps align revenue recognition with project progress and improves financial tracking.
Subcontracting or Partial Manufacturing
If you subcontract part of your production (e.g. coating, welding, packaging), your business must issue and collect e-invoices for each transaction to support audit trails and tax reporting.
Returns, Rework, or Quality Issues
If a buyer returns goods due to quality issues or defects, you must issue a credit note e-invoice to reflect the returned value. For reworked goods, if an additional fee is charged, a new e-invoice is required for that service.
Challenges Manufacturing Businesses May Face
- Delayed Client Payments: Manufacturers often face 60–90 day payment terms from buyers, even while expenses pile up at each production stage.
- System Integration Costs: Many existing ERP or invoicing systems may need upgrading to comply withIRBM’s XML/JSON format and MyInvois API.
- Manual Workflows for Smaller Players: SMEs without digital systems may need to issue e-invoices manually via the portal — not ideal for high-volume operations.
- Supply Chain Complexity: Tracking supplier invoices and ensuring proper documentation for inputs and sub-processes can be time-consuming.
How Manufacturers Can Prepare for E-Invoicing
- Review your ERP, accounting, or invoicing system for compatibility with the MyInvois platform
- If not compatible, explore API-ready solutions or use the MyInvois portal for smaller volumes
- Establish SOPs for issuing e-invoices based on payment milestones or batch delivery
- Train your finance, operations, and sales teams on how e-invoicing works and who is responsible
- Prepare financially for software costs, process adjustments, or short-term cash flow slowdowns
Financing Solutions to Support Manufacturing SMEs
The shift to e-invoicing may improve transparency and efficiency, but the upfront costs can stretch already tight margins, especially for SMEs in food and general manufacturing.
Funding Societies offers financing options tailored to manufacturers:
Invoice Financing
Convert issued e-invoices into immediate working capital. Access up to RM1 million to fund raw materials, production, or fulfilment while waiting for customer payment.
Micro Financing
Fast, collateral-free financing up to RM200,000. Ideal for upgrading internal systems, software, or covering utility costs during slower cash cycles.
Islamic Financing
Shariah-compliant options are available for businesses seeking ethical financing alternatives.
Budget 2025 Support for Manufacturing SMEs
To ease the cost of digitalisation and compliance, the Malaysian government introduced several incentives under Budget 2025:
- RM3.2 billion in microloans via TEKUN and BSN
- RM50 million in digital matching grants for system upgrades (including e-invoicing)
- RM3.8 billion via BNM to support automation, digitalisation, and ESG initiatives
- RM20 billion in loan guarantees through SJPP
- Up to RM50,000/year in tax deductions (YA 2024–2027) for ESG-related advisory services, including e-invoicing consulting
You can combine these with private financing to reduce upfront cost pressure.
Final Thoughts
Manufacturing businesses and other SMEs can’t afford to ignore e-invoicing. While it may add complexity in the short term, it also brings opportunities to streamline operations, improve tax compliance, and build stronger financial systems.
With the right tools, preparation, and financing support, your business can stay ahead of the curve and thrive through this transition.
