Intercompany Lending

Intercompany lending is the provision of funding from one group entity to another within the same corporate group.

In treasury terms, it is one way the group can use its own cash internally before relying on outside borrowing.

Why it can be useful

If one entity has surplus cash while another needs funding, intercompany lending may be cheaper, faster, or more flexible than external borrowing.

It can support:

• short-term liquidity needs
• project funding
• central treasury structures
• settlements created by physical cash concentration or an in house bank

Why it still needs discipline

Because the money stays inside the group, beginners sometimes assume intercompany lending is informal. In practice, it still requires documentation, governance, and clear terms.

The issues treasury cannot ignore

Tax, legal, accounting, and transfer pricing considerations all matter. Treasury also needs to ensure intercompany activity follows treasury policy and fits the company's broader funding model.

A useful beginner takeaway

Intercompany lending is a treasury tool, not just an accounting entry. It can improve liquidity flexibility, but only if it is managed with the same seriousness as external financing.