Understanding the settlement mechanism in Microsoft Dynamics AX

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Settlement is a accounting transaction that occurs in Accounts payable, accounts Receivables, and General Ledger. This transaction are used mainly for settling vendor invoices against vendor payments or advanced payment, and customer INV Oices against customer collections or advanced collection. Settlement could occur on General ledger transactions as well.

It is necessary to classify posting profiles of the vendor and customer in the opening balance since it would affect the SE Ttlement process.

The settlement transaction affects vendor and customer balances, and it is reported in the vendor or customer statement re Port that identifies the following:

Vendor

• The open (unsettled) invoice and payments
• The closed (settled) invoiced and payments
• Vendor Balance

Customer

• The open (unsettled) Invoice and collections
• The closed (settled) invoiced and collections
• Customer Balance

A settlement transaction could occur during a payment or collection transaction if the accountant marks the invoice which Would be paid or collected. On other hand, the settlement could is performed on the vendor or customer level, and these transactions could be unsettle D.

The settlement transaction should take into consideration the currency since it could being performed in the company home cur Rency by equivalent amount which calculated based on currency exchange rate, or it could being settled in the same currency o F Invoice by identifying the currency in payment process.

Customer settlement Mechanism–dynamics AX

Customer settlement in Microsoft Dynamics AX are a transaction used to settle customer advanced collections or collections Against customer invoices, and this function do on a monthly basis.

Customer settlement has different effects. The first one is on customer Level–it closes the customer transaction. And the second one is on the financial entry, which is only a effect in the case that the posting profiles of the advance D collection and invoice are different.

Next I'll illustrate the mechanism of customer advanced collection, invoices, and customer settlement financial entries (In Egyptian POUNDS–EGP):

1) Customer Advanced Collection posting profiles is prepayments, and the financial entry would be:

• Dr. Banks-EGP
• Cr. Customer Deposits EGP
• Open transactions:1200 EGP Advanced Collection

2) Customer Invoice posting profile are general, and the financial entry is:

• Dr. Receivables-EGP
• Cr. Sales revenue EGP
• Open transactions:1200 EGP Advanced Collection, and + EGP sales Invoice

3) Customer Settlement

• Dr. Customer Deposits-EGP
• Cr. Receivables-EGP
• Open transactions:200 EGP Advanced Collection
• Closed transactions:1000 EGP Advanced Collection, and + EGP sales Invoice

In the case, the posting profiles of advanced collection and invoicing were different, then there is a settlement Finan Cial entry that'll be created.

Vendor Settlement Mechanism–ms Dynamics AX

Vendor settlement in Dynamics AX are a transaction that occurs to settle Vendor advanced payments against Vendor invoices, And this function is do on a monthly basis.

Vendor settlements has a different effects. The first one is at the vendor level:the vendor transaction closes. The second is the financial entry, which occurs only in one case if the posting profiles of advanced payment and Invoice AR E different.

Here I'll illustrate the mechanism of vendor advanced payment, invoices, and vendor settlement Financial.

1) Vendor Advanced Payment posting profiles is Advanced,and the financial entry would be:

• Dr. Advances to Vendor EGP
• Cr. Bank-EGP
• Open transactions:1200 EGP Advanced Payment

2) Vendor Invoice posting profile are general, and the financial entry is:

• Dr. Expense-EGP
• Cr. Payables-EGP
• Open transactions:1200 EGP Advanced payment, and vendor EGP Invoice

3) Vendor Settlement

• Dr. Payables-EGP
• Cr. Advances to Vendor EGP
• Open transactions:200 EGP Advanced Payment
• Closed transactions:1000 EGP Advanced Payment, and EGP vendor invoice

In the case that the posting profiles of advanced payment and invoicing is different, a settlement financial entry would b E created.

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Understanding the settlement mechanism in Microsoft Dynamics AX