An intercompany transaction is any flow of goods, services, funds or costs between two entities that belong to the same corporate group. It is real for each entity taken separately, and it must disappear at group level: the group cannot sell to itself, lend to itself or invoice itself a profit.
The main types are recurring and recognisable. Sales of goods or services between entities. Management fees charged by a holding company to its subsidiaries. Shared costs recharged, such as rent, IT or payroll. Intragroup loans and current accounts. Royalties and licence fees on brands or technology.
Every intercompany transaction obeys the mirror principle. If entity A books a receivable of 40 000 euros against entity B, entity B must book a payable of 40 000 euros against entity A, in the same period, with the same description. The two sides are recorded in reciprocal accounts that are supposed to balance to zero when set against each other. When they do not, the group has an intercompany mismatch to resolve before it can close.
Two disciplines then apply to the same flow. Transfer pricing governs whether the price charged between entities is defensible to a tax authority. Consolidation governs whether the flow is properly removed through an intercompany elimination entry. Both depend on the underlying transaction being recorded identically on both sides in the first place.
Phacet's intercompany flow reconciliation agent ingests the ledgers of every entity, matches corresponding entries semantically rather than by reference number, and surfaces the pairs that do not agree as prioritised exceptions. Combined with consolidation across multiple ERPs, it turns a manual chase across accounting teams into a reviewed exception list. See also intercompany invoice reconciliation for the process view.
