Projects collect costs and revenues during the account period so they can be analyzed against plan and budget values. You must settle the values in the project to their appropriate cost or accounting data. You settle revenue and cost of sales to profitability analysis. Settlement causes financial entries for any work in process costs in the project. Settlement also creates financial entries for any cost that needs to be capitalized in asset management.
Generating Settlement Rules
Objective
After completing this lesson, you will be able to generate settlement rules
Business Example
Settlement Aspects
Costs and revenues are collected in projects only temporarily. They are settled to one or more receivers as part of period-end processing.
Settlement: Debit and Credit
In settlement, the actual costs (and, if required, revenues) incurred in a commercial object are allocated, in whole or in part, to one or more receivers. Offset postings that credit the sender object are generated automatically. The debit postings assigned to the sender object remain after settlement is performed and can be displayed. The settled costs are updated to the respective receiver objects and are display reporting.
Settlements: Costs and Revenues
Actual costs and actual revenues occur in a project or order as a result of the following:
Material withdrawals and goods receipts
Vendor invoices
Customer billing
Internal activity allocations, transfers, cost distribution, process costs, and overhead
Confirmation of network activities
In settlement, costs/revenues are transferred to the following:
Financial Accounting (G/L account)
Asset Accounting (fixed asset)
Cost Accounting/profitability analysis (order, cost center, and profitability segment)
Project System (WBS element, network, and activities)
You need a settlement rule to perform settlement. You define the settlement rule in the sender object. The settlement rule contains distribution rules and settlement parameters for a sender object.
Settlement Rules
You can maintain the settlement rule for WBS elements or networks and activities in an overview screen. Use distribution rules to specify the proportion of costs that need be settled to receivers.
Costs can be distributed based on the following:
Percentages
Equivalence numbers
Fixed amounts
There are two types of settlements: periodic and full. In periodic settlement, only the costs of the period for which you specify settlement are settled. In full settlement, the costs for all the periods up to the one you specify in settlement are settled.
You can branch from the overview screen to a settlement rule parameters screen that is used to change the settlement profile or structures that it opens.
Generating the Settlement Rule for a WBS
As of SAP R/3 4.5, you can use a mass processing transaction to derive settlement rules for WBS elements.
Various strategies determine the settlement rules for WBS elements. You define the following strategies in Customizing:
You usually perform results analysis for billing elements in sales projects. The resulting analysis data includes the costs and revenues of lower-level WBS elements and activities/orders. For this reason, only the results analysis elements are settled.
When the system derives settlement rules, it generates profitability segments that contain the characteristic values of WBS elements and sales orders assigned to them.
You only assign settlement rules and results analysis keys to billing elements. You assign all other objects to the settlement profile Do not settle.
In the case of cost projects, the system can derive the settlement rule for WBS elements from the cost center or requesting cost center.
A higher-level WBS element can also pass a settlement rule to its lower-level WBS elements. This can occur over several levels, but WBS elements that do not have a settlement rule of their own can only inherit the rule.
Settlement Strategy for WBS Elements
You can use the settlement strategy for WBS elements to automatically determine a settlement rule.
WBS-operative indicators for account assignment and billing element determine the settlement profile and results analysis key.
In the training exercise, WBS elements that are not billing elements are assigned settlement profile 90, which has the setting Not for settlement. Also, No receiver is assigned for the settlement rule for these WBS elements.
You determine settlement rules to the profitability segment for the two billing elements in the training example. The Change in assignment of the organizational units indicator specifies that the settings are valid only if the assignments of the current object and directly preceding object in the hierarchy differ in one of the following organizational units:
Company code
Business area
Profit center
You execute results analysis for each billing element with an organizational change. This enables reserves and WIP to be calculated for each organizational unit. You assign the settlement strategy profile to the project profile.
Deriving Settlement Rules for Activities
You can define a strategy to determine the settlement rule in networks and activities.
In this strategy, you specify the sequence in which the settlement rule must be determined:
Use the settlement rule of the WBS element
Use the settlement rule of the project definition
Generate a settlement rule using the default rule
Generate a settlement rule for the WBS element
Manual maintenance of the settlement rule
Settlement Rules for Network Activities
You can assign a settlement strategy to parameters for the network type and plant. The strategy determines the priority to assign the default settlement rule.
The system executes the strategy left to right, assigning the first successful settlement rule to the network or network activity based on the account assignment object.
If you use No settlement rule, costs are settled directly from the assigned WBS element.