Intercompany Vs. Intracompany: What’s The Difference?

Business Terms

Companies have many different ways that they interact with their branches and with other companies. There are often terms used that shorten longer descriptions that end up turning into business jargon. Once you know what the term means and understand its components, then it’s easy enough to keep the meanings of the two clear.

Intercompany means between different companies. For instance, a loan secured from one bank to another would be an intercompany loan. There can also be inter-company collaboration, such as the Pfizer-BioNTech covid-19 vaccine. Pfizer and BioNTech are two different companies, but they worked together to research, invent, manufacture, and sell the vaccine.

Intracompany, on the other hand, is something that happens within a company. This can be interactions between employees or different branches of the company. For instance, hiring is often an intracompany endeavor. The department hiring, let’s say finance, has to work with the human resources department in order to get new personnel hired.

Key Takeaways:

Intercompany	Intracompany
Trade, interaction, or business that happens between two or more companies.	Trade, interaction, or business that happens inside the branches or subsidiaries of a single company.
Inter- means between or among.	Intra- means “within.”
The first known usage of the word was in 1883.	The first known usage of the word was in 1926.
The prefix is derived from Latin, then went through Indo-European.	The prefix is derived from Old Latin and moved to Late Latin and then into English.

What Is Intercompany?

The dictionary definition of intercompany is “occurring or existing between two or more companies.” This can be sales, loans, collaboration, or other interactions between companies. There can be intercompany rivalry, for example, such as between Coca-Cola and Pepsi.

Is defined by its prefix inter-. The prefix in this context means between, among, or in the midst. It was taken from Latin, which meant among or between. From there, it went to Indo-European, which also broke into the Old Irish eter or iter meaning between. Also similar to the Old Welsh ithr.

There are similar words for it in Sanskrit, Old Norse, Greek, Armenian, and Avestan. All of these words mean between, inside, or among. It was then affixed to company to mean something that happens among or between.

The verb “inter” is also taken from Latin, though it comes from a different root. Instead, it’s derived from terra, which is the Latin word for earth.
First known use was in 1883. The word’s first recorded usage was in that year. Its meaning hasn’t changed since then.
Can also be spelled inter-company. This spelling is a less common variant than the single word, but it’s a perfectly acceptable spelling. It likely started out with a dash and has since dropped it to become a compound word.

Examples:

Many types of sales are intercompany. For instance, McDonald’s buys its supplies from other companies, such as potatoes for its friends and beef for its burgers. That makes them intercompany sales.

There can also be intercompany deals. For example, most fast food chains select either Coca-Cola or Pepsi beverages to sell and then advertise them as well.

What Is Intracompany?

Intracompany’s dictionary definition is “occurring within or taking place between branches or employees of a company.” In short, intercompany means something that happens inside the company itself rather than involving outside influences.

Is defined by the prefix intra-. The prefix intra-, in this case, means “within.”

Its prefix is derived from Late Latin, which was taken from intra. In Old Latin, it was internus, which was an adjective that meant inward.
First known usage was 1926. This makes it a relatively recent addition to the English language. It had the same meaning at the time that it does now, of being within parts of a company.

Examples:

There can be intracompany strife. For instance, if two different departments are at odds. If, as an example, the engineering department disagrees with how their product is being marketed, then there would be intracompany strife between the engineering department and the marketing department.

There can also be intracompany collaboration. This type of teamwork is necessary to accomplish the company’s goals. For instance, the sales department may work with engineering in order to facilitate sales.

They may even have an ambassador from engineering to explain the more complex aspects of a technical product.

Intercompany vs. Intracompany FAQ

What does intracompany trade mean?

An intracompany trade is when two subsidiaries of the same company do business with one another. For instance, Lego selling its products to a Lego store. Both are owned by the same parent company, but “trade” or business transactions are still happening.

This can only happen if a company is vertically integrated. Other examples are a company that owns a parts manufacturer purchasing their parts from their own subsidiary.
What would be an intracompany transfer?

An intracompany transfer is when an employee or other resource is transferred from one part of the company to another. This can be an employee moving from sales to marketing, for instance, or even being shifted to a subsidiary.

It can also work with equipment or resources. For example, If the computers are too old to be useful to the programming part of a company but still perfectly serviceable, they may be transferred to a different department that doesn’t need cutting-edge technology.
What is intercompany recharging?

Intercompany recharging occurs when one company incurs the cost of another, then moves the cost to another entity. They can also bill or invoice them, depending on the circumstance.

The point behind it is to make sure that the company that received the goods or services is accurately charged for it.

Business Terms

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Author

Di Doherty

Di has been a writer for more than half her life. Most of her writing so far has been fiction, and she’s gotten short stories published in online magazines Kzine and Silver Blade, as well as a flash fiction piece in the Bookends review. Di graduated from Mary Baldwin College (now University) with a degree in Psychology and Sociology.

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