---
title: "Intercompany transaction"
description: "What intercompany transactions are, common types (sales, loans, recharges, fees), how each side is recorded, and how automation keeps both sets of books in agreement."
canonical: https://ledgeriano.com/glossary/intercompany-transaction
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# Intercompany transaction

> What intercompany transactions are, common types (sales, loans, recharges, fees), how each side is recorded, and how automation keeps both sets of books in agreement.

An intercompany transaction is a sale, loan, cost recharge, management fee or other dealing between two companies in the same group. It is recorded in both sets of books, for example as a sale and a receivable in one company and a purchase and a payable in the other, and is eliminated when the group consolidates.

Both sides must match in amount, date and classification. When they do not, the group's intercompany balances fail to reconcile at month end, and the consolidation team spends days chasing differences caused by timing, exchange rates or a missed invoice.

Common types are intercompany sales of goods, shared service recharges (IT, HR, rent), management fees, intercompany loans with interest, and dividends from subsidiaries to the parent. Each needs a pair of accounts, such as due from and due to related parties, tagged with the other company as the [party](https://ledgeriano.com/glossary/party).

Automation removes most of the pain. In Ledgeriano a workflow can mirror a posted entry from one business into the other using an account map, so both sides are created from one source. See the [intercompany automation guide](https://ledgeriano.com/guides/intercompany-automation).

## Example: a 10,000 management fee

The parent charges a subsidiary a monthly management fee. Each company records its own side.

| Company | Account | Debit | Credit |
| --- | --- | --- | --- |
| Parent | Due from subsidiary | 10,000 |  |
| Parent | Management fee income |  | 10,000 |
| Subsidiary | Management fee expense | 10,000 |  |
| Subsidiary | Due to parent |  | 10,000 |

### Do intercompany transactions affect group profit?

No. A sale from one group company to another is eliminated on consolidation, along with any unrealized profit in inventory still held in the group.

### Are intercompany prices regulated?

Often yes. Transfer pricing rules in many countries require arm's-length prices and documentation for cross-border intercompany deals.

Guide: https://ledgeriano.com/guides/intercompany-automation