How to set up intercompany rates in VOGSY

For multinational companies, it's common for employees from one subsidiary to work on projects for another. "Intercompany transfer pricing" is the process of charging for these internal services to ensure costs and profits are allocated fairly across the group.

VOGSY helps you manage this by allowing you to set specific intercompany rates for your employees.

The goal of setting these rates is to reflect an "arm's length" price—the price you would charge if the services were provided to an external, unrelated company. This practice is crucial for:

• Fair Profit Allocation: It ensures that costs and profits are attributed to the correct legal entity within your group.

• Accurate Performance Tracking: It provides a true picture of each subsidiary's financial performance, leading to better management decisions.

Before you can assign rates, you must first activate the feature for your whole VOGSY environment.

• Action: Go to the Accounting Settings in the back office and switch on the setting for intercompany cost rates.

Once the feature is enabled, a new field will appear in each employee's profile.

• Action: For each employee who may work on projects for other subsidiaries, enter their specific intercompany cost rate.

• How it works: This rate will be automatically booked as a cost against the project whenever that employee tracks time on a project belonging to a different company within your group.

VOGSY supports two standard methods for handling the actual financial settlement of these intercompany costs. You can choose the one that best fits your accounting practices:

• Journal Entries: The system can automatically book the intercompany costs between the two companies using their respective current accounts.

• Intercompany Invoicing: The employee's home company can generate and send a formal invoice to the project's company, based on the hours logged at the specified intercompany rate.