GlossaryEN1 min readUpdated: Jun 25, 2026

Intercompany Freight Billing

Intercompany freight billing is the internal process by which one group company invoices and settles transportation services rendered to other entities within the same corporate group.

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Last updated: 25 June 2026Published: 19 June 2025

Source: https://blogs.sap.com/2017/06/27/intercompany-freight-settlement---project-calculation-and-actual-cost/

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Definition & Explanation

Intercompany freight billing is the internal process by which one group company invoices and settles transportation services rendered to other entities within the same corporate group. The providing unit—typically a central transport department or an in-house logistics entity—records transport mode, route, weight, and applicable charges, allocates them to the requesting business units, and issues the corresponding intercompany invoices. From a tax perspective, strict adherence to the arm's length principle is mandatory: internal transfer prices must reflect what independent parties would agree to under comparable conditions, or tax authorities may challenge the pricing. Multinationals typically establish standardized rate schedules and documented pricing policies to withstand audits. This process differs from external freight cost allocation, in which third-party invoices are distributed across internal cost centers.