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Inter Company Journal Entry in ERPNext

An Inter Company Journal Entry is used for accounting transactions between multiple companies belonging to the same group.

It ensures proper financial tracking when one company performs transactions on behalf of another company within the same organization structure.

Use Case

This is commonly used when:

  • One company purchases goods/services on behalf of another company
  • Funds or expenses are shared between group companies
  • Internal settlement between related organizations is required

Prerequisites

Before creating an Inter Company Journal Entry, ensure:

  • At least two Companies exist in ERPNext
  • Proper inter-company accounts are created in Chart of Accounts

How to Create Inter Company Journal Entry

  1. Go to Journal Entry List and click New.
  2. Select Entry Type as Inter Company Journal Entry.
  3. Select the Company that is initiating the transaction.
  4. Add accounting rows for debit and credit entries.
  5. Specify Internal Accounts, Amount, and Cost Center (if applicable).

Generating Linked Company Entry

After submitting the Journal Entry:

  1. Click on Make Inter Company Journal Entry button.
  2. Select the second Company for which the linked entry will be created.
  3. A new Journal Entry will be auto-generated for the selected company.

Important Rule

The second Journal Entry must mirror the first entry with opposite debit and credit values.

  • If Company A debits Bank ₹500 and credits Debtors ₹500
  • Then Company B must debit Creditors ₹500 and credit Bank ₹500

Accounting Impact

  • Ensures proper inter-company reconciliation
  • Keeps books balanced across multiple companies
  • Maintains audit-friendly internal transactions

Result

  • Both companies get accurate ledger entries
  • Inter-company balances are correctly maintained
  • Financial statements remain consistent across group entities

Inter Company Journal Entries ensure clean, structured accounting between related companies in ERPNext.

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