SME Automating e-Invoice Submission via SFTP

Business Background

The client is a Malaysian SME operating in the wholesale and distribution sector. They process a high volume of invoices daily—typically between 200 and 500 invoices per day—serving a network of retail partners across the country.

Their operations are built around a legacy accounting and inventory management system that has been in use for over 15 years. While the system is stable and well-understood by their team, it was not designed with modern API integration in mind. However, it does have the capability to export invoice data as structured files on a scheduled basis.

When LHDN announced the MyInvois e-Invoice mandate, the company faced a critical challenge: how to comply without replacing their core business system.

Challenges Faced

Manual Portal Submission Not Scalable: With hundreds of invoices issued daily, manual entry into the MyInvois portal was operationally impossible.
High Volume of Daily Invoices: The sheer number of transactions made any manual process prone to delays and backlogs.
Human Errors During Manual Uploads: Staff reported frequent mistakes when manually uploading files, including incorrect file selection and data entry errors.
Difficulty Tracking Submission Status in Bulk: There was no efficient way to monitor which invoices had been successfully submitted and which had failed validation.

Why an SFTP-Based Integration Was Chosen

The company evaluated several options, including replacing their legacy system or developing a custom API integration. However, both approaches were deemed too costly and disruptive.

An SFTP-based integration emerged as the most practical solution for the following reasons:

Existing System Produced Structured Files: The legacy system already exported invoice data in a consistent format, making file-based integration straightforward.
API Integration Not Required: The company's batch-oriented workflow did not require real-time submission. Scheduled file transfers were sufficient.
Need for Scheduled, Unattended Submission: The operations team wanted a "set and forget" solution that would run automatically without daily manual intervention.
Team Preferred File-Based Workflows: The IT and finance teams were already familiar with file-based processes, reducing the learning curve.

Integration Approach

The solution involved setting up an SFTP-based automated workflow between the legacy system and our middleware platform.

How it works:

Scheduled Export: At the end of each business day, the legacy system automatically exports invoice data as CSV or JSON files.
SFTP Transfer: An automated script transfers the files to a designated folder on the middleware's SFTP server.
Middleware Processing: The middleware detects new files, validates the data, maps it to the LHDN e-Invoice schema, and submits it to MyInvois.
Response Files: After processing, the middleware generates response files containing submission statuses, document UUIDs, and any error messages.
Status Retrieval: The company's finance team can retrieve these response files via SFTP or view the results in the middleware's web dashboard.

Learn more about SFTP Integration

This approach was ideal for the SME because it required no changes to their core business system. The legacy system continued to operate as before, with only a simple file export added to the daily routine.

Implementation Scope

To ensure a smooth deployment, the project scope was clearly defined:

Included:

SFTP folder structure setup with separate directories for incoming files, processed files, and error files.
File naming conventions and processing rules to ensure correct sequencing and avoid duplicate submissions.
Basic validation checks before submission, including schema validation and mandatory field verification.
Generation of status and error files for each batch, allowing the finance team to review outcomes.
Integration with the middleware's audit trail system for compliance tracking.

Excluded:

Modifications to the core business system's invoicing or accounting logic.
Complex real-time integrations or API-based synchronization.

Outcome and Results

The SFTP-based automation delivered tangible improvements to the SME's daily operations:

Reduced Manual Effort

Finance staff no longer spend hours manually uploading invoices. The process now runs automatically overnight.

More Consistent and Predictable Processing

Automated file transfers eliminate human error and ensure invoices are submitted on a reliable schedule.

Improved Visibility into Failed or Rejected Invoices

Response files and the middleware dashboard provide clear feedback on submission outcomes, allowing quick resolution of errors.

Better Operational Control for Finance Teams

The finance team can now focus on exception handling rather than routine submission tasks, improving overall efficiency.

Key Takeaways

SFTP automation is suitable for high-volume SMEs: Businesses processing hundreds of invoices daily can achieve compliance without manual intervention.
File-based integration reduces operational burden: For batch-oriented operations, SFTP provides a reliable and familiar workflow that fits existing processes.
Middleware enables MyInvois readiness without system overhaul: Legacy systems can remain in place while achieving full e-Invoice compliance through middleware integration.

This case study reflects a real implementation scenario in Malaysia. Client details have been anonymized.