Internal orders are usually used as an interim collector of costs and an aid to the planning, monitoring, and reporting processes. When the task is completed, the costs are passed on to their final receiving object, like cost center, WBS element, or profitability segment. This process is called settlement.
In settlement, some or all costs posted to an order are allocated to one or more receivers. The offset postings, which credit the order, are generated automatically. You can process settlement for individual orders or collectively for a group of orders.
The costs gathered on an order can be settled on a variety of account assignment objects:
- Settlement to an asset or G/L account is an external settlement. The reason for that is, that Financial Accounting is updated by the settlement.
- A settlement to another management accounting object (cost center, WBS element, profitability segment) is an internal settlement.
You can settle statistically to a cost center, statistical order, or statistical WBS element in addition to the real receivers.
Order settlement is not mandatory, so the order can remain with a balance indefinitely.
Distribution Rule
The distribution rule specifies which portion of the order costs should be settled to which receiver. Each line in the distribution table defines the allocation to a particular receiver. Costs can be allocated to the receivers based on the following:
- Percentage settlement
Equivalence numbers
Amount settlement.
The following settlement types are defined in the system for overhead orders:
Settlement type Periodic Settlement settles only the costs for the period you specify.
Settlement type Full Settlement settles all costs on a sender object that have been incurred right up until the settlement period.
Each time an object is settled, a settlement document is created. In addition to the settlement document, the system also creates:
A document in FI containing all accounting-related data (external settlement only).
A document in CO containing purely cost accounting-related data.
