Vendor settlement in MS Dynamics AX is a transaction occurred to settle vendor advanced payment against vendor invoices, and this function done in monthly basis.
Vendor settlement have two different effects first one on vendor level, it is vendor open/close transaction, and second one financial entry, the financial effect occurred only in one case if the posting profile of advanced payment, and invoice are different.
Hereunder will illustrate the mechanism of vendor advanced payment, invoices, and vendor settlement financial entries;
Vendor advanced payment posting profile is advanced, and the financial entry will be:-
Dr. Advances to vendor 1200 EGP
Cr. Bank 1200 EGP
Open transactions: 1200 EGP Advanced payment
Vendor invoice posting profile is General, and the financial entry is:
Dr. Expense 1000 EGP
Cr. Payables 1000 EGP
Open transactions: 1200 EGP Advanced payment, and 1000 EGP vendor invoice
Dr. Payables 1000 EGP
Cr. Advances to vendor 1000 EGP
Open transactions: 200 EGP Advanced Payment,
Closed transactions: 1000 EGP advanced payment, and 1000 EGP vendor invoice
There is an option to unsettle transactions from Closed transaction editing, and that will cause a financial entry.
In case of the posting profiles of advanced payment, and invoicing are not different there is no settlement financial entry created.