Revenue sharing across the departments in a business unit

Intra-Company Contract & Revenue Sharing: Solution Proposal

1. Business Requirement

The business wants a formal arrangement whenever one department (the provider) delivers consulting resources or services to another department (the receiver) within the organization. The arrangement must:

• Establish an internal contract between the provider and receiver organizations, with agreed scope, rates and value.
• Set a budget for the receiver department, with the cost of services booked against it.
• Recognize revenue in the provider organization, controlled by an agreed threshold (cap).
• Share revenue transparently across organizations, based on agreed transfer pricing.

2. Why Borrowed and Lent Does Not Fully Meet the Need

Borrowed and Lent was proposed first. It is a lightweight cross-charge method, but it falls short here: