Settlement

The function of settlement in SAP PS (Project System) is to transfer costs and revenues
from a project to other cost objects or receivers within the SAP system. Settlement is a
key process in project controlling and financial management, and it serves several
important functions:

1. Cost Distribution: Settlement allows for the distribution of project costs to

appropriate receivers, such as cost centers, internal orders, or other cost objects.
This ensures that the costs incurred in the project are accurately allocated to the
responsible entities for accounting and reporting purposes.
2. Revenue Allocation: In addition to costs, settlement also enables the allocation of
project revenues to the relevant receivers. This is particularly important in
projects where revenue recognition is required, such as fixed-price contracts or
milestone-based billing.
3. Financial Control: Settlement helps in maintaining financial control over projects
by ensuring that costs and revenues are properly accounted for and allocated. It
allows for accurate tracking of project profitability, budget utilization, and
financial performance.
4. Integration with Financial Modules: Settlement integrates with other SAP
modules, such as Financial Accounting (FI) and Controlling (CO), to ensure
consistent financial reporting and analysis. The settled amounts are posted to the
appropriate general ledger accounts and cost elements, providing a holistic view
of the project's financial impact.
5. Reporting and Analysis: Settlement provides the basis for financial reporting and
analysis related to projects. It enables the generation of settlement documents
and reports that show the distribution of costs and revenues, allowing
stakeholders to monitor project financials, track variances, and make informed
decisions.