Inter Company Invoice
An Inter Company Invoice is a transaction between two companies that belong to the same group.
It allows seamless financial tracking between internal entities by linking Sales and Purchase Invoices across companies.
1. Understanding Inter Company Transactions
In ERPNext, inter company transactions help organizations maintain clear accounting between subsidiaries while ensuring proper reconciliation.
A Sales Invoice from one company can automatically link to a Purchase Invoice in another company.
This ensures both companies reflect consistent financial entries.
2. Setup Requirements
Before creating inter company invoices, you must configure both Customer and Supplier correctly.
2.1 Internal Customer Setup
- Go to Accounts > Customer.
- Enable Is Internal Customer.
- Set Represents Company (the company issuing the Sales Invoice).
- Add allowed transaction companies in Allowed To Transact With.
2.2 Internal Supplier Setup
- Go to Accounts > Supplier.
- Enable Is Internal Supplier.
- Set Represents Company (the company receiving the Purchase Invoice).
- Define allowed transaction companies in Allowed To Transact With.
Each company can have only one internal customer and one internal supplier.
3. Price List Configuration
To ensure proper inter company pricing:
- Create a dedicated Price List for inter company transactions
- Enable both Selling and Buying options
- Assign this Price List to internal customer and supplier
This ensures consistent pricing across internal entities.
4. How to Create Inter Company Invoice
- Create a Sales Invoice for the internal customer.
- Select the correct company and items.
- Click on Make > Inter Company Invoice.
- ERPNext will auto-create a linked Purchase Invoice.
- Review and submit both documents.
5. Key Features
5.1 Automatic Linking
Invoices are automatically linked between companies, ensuring traceability.
5.2 Bi-directional Workflow
You can start from either:
– Sales Invoice → Purchase Invoice
– Purchase Invoice → Sales Invoice
5.3 Ledger Impact
Inter Company Invoices only affect accounting ledgers, not stock ledgers.
This is because both companies belong to the same organizational group.
6. Important Notes
- Cancellation of one invoice breaks the inter-company link
- Pricing must be synchronized before transactions
- Only one internal customer/supplier is allowed per company
7. Business Benefits
Inter Company Invoices help businesses:
- Simplify internal accounting
- Maintain transparent financial records
- Automate reconciliation between companies
- Reduce manual bookkeeping effort
Inter Company Invoices in ERPNext enable structured financial transactions between companies within the same group. By linking Sales and Purchase Invoices, ERPNext ensures consistent accounting records, automated reconciliation, and simplified internal billing without affecting stock ledgers.
Inter Company transactions are purely financial in nature and are designed to maintain clarity between internal entities without duplicating operational stock movement.
