How to use intercompany invoicing
First published on November 24, 2025 , updated on November 24, 2025Why use Intercompany Invoicing
For organizations with multiple entities, manual cross-charging is often a bottleneck. Financial administrators typically have to export timesheets to spreadsheets, manually calculate costs based on different transfer prices, and then manually create invoices in two different systems.
The VOGSY Solution vs. Manual Processing
| Manual process | VOGSY automated process |
|---|---|
| High error risk: Manual entry of hours and rates leads to calculation errors. | 100% Accuracy: Invoices are generated directly from approved time entries and pre-configured rates. |
| Time-consuming: Requires hours of reconciliation at the end of each month. | Instant generation: Create hundreds of invoice lines in seconds with a single "Draft Invoice" run. |
| Disconnected data: No link between the project work and the financial transaction. | Traceable audit trail: Every invoice line links back to the specific customer, project, and deliverable. |
What is intercompany invoicing?
Definition: VOGSY Intercompany Invoicing is an automated financial workflow that identifies when an employee from one internal company (the "Lender") tracks time on a project owned by a different internal company (the "Borrower"). It automatically calculates the cost and generates a corresponding invoice to settle the internal debt.
Part 1: Configuration & setup
Before you can generate your first invoice, three key areas in the Back Office must be configured.
Enable accounting settings
Link customers to companies
Define Rates (If using Activity Rates)
These steps are explained in the article "How to set up intercompany invoicing".
Part 2: Generating the invoices
Once configured, generating intercompany invoices becomes part of your regular billing workflow.
Navigate to Back office applications > Create draft invoices.
Select Intercompany invoices.
Select a specific billing period.
Choose what the invoice date should be, the date of the approval, or a specified invoice date.
Review the Output:
VOGSY generates draft invoices grouped by Currency.
Invoice Lines: Each line description automatically includes the Customer Name, Project Name, and Deliverable Name (e.g., "Acme Corp - ERP Implementation - Phase 1").
Note: A time entry is only included if:
It is Approved.
The Intercompany Cost Rate is greater than 0.
The Employee's company differs from the Project's company.
Part 3: The approval workflow
The approval process is automated to ensure that the correct internal stakeholder reviews the charges.
The Trigger: A draft invoice is created.
The Approver: The system routes the invoice to the Manager of the internal company receiving the invoice (the "Customer").
The Action: The manager receives a notification, reviews the PDF, and clicks Approve or Reject.
The Result:
A final invoice is generated and emailed to the entity's finance contact.
Financial journal entries are automatically posted to your ledger.
Frequently asked questions
How can I see which hours have been invoiced?
Use the Time Entries report. We have added a column called Status intercompany invoicing which shows:
To be invoiced: Approved but not yet processed.
On draft: Currently sitting on a draft invoice.
Invoiced: Finalized and closed.
Does this affect the invoice I send to the actual external client?
No. The intercompany invoice is purely internal. External billing to the final client is handled through the standard project invoicing workflow and is completely independent.
How does VOGSY determine which currency to use if the companies use different currencies?
This depends on your configuration in Accounting Settings. You can choose to force the currency of the Sender (the company doing the work) or the Receiver (the company paying for the work). VOGSY will group the draft invoices by currency accordingly.
Why are some approved hours missing from the invoice?
Check the Intercompany Cost Rate. If the rate is set to 0 for that employee or activity, VOGSY assumes no charge is needed and excludes the time entry.
Can I manually add lines to an intercompany invoice?
No. Unlike regular invoices, intercompany invoices are strictly data-driven. You cannot manually add lines via the "Draft Invoices" screen; they must originate from approved time entries.
Does the standard "Who approves draft invoices" setting apply to intercompany invoices?
No. The general approval settings are ignored for this feature. Intercompany invoices are always routed to the manager of the internal company associated with the "Customer" (the receiving entity).