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What is the difference between these two? and in ledger settlement can we settle customer/vendor transaction?
if yes then what will be the impact on customer/vendor?
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Hi,
An accrual scheme allocates costs over periods.
Example: On Jan 1st you receive and invoice for $12000. With the help of an accrual scheme you can - for example - allocate $1000 to each month.
Ledger settlements are similar to the settlements that you find in AP/AR.
The difference is that they are made at the ledger account level only.
Example: You post a provision for $150000. At the end of the year you reduce it by $30000 resulting in a provision balance of $120000. To see the balance directly on the ledger account you can make use of ledger settlements in order to filter only the open balance.
Best regards,
Ludwig
But customer transaction is also showing in ledger settlement.( what will be the impact if i settled customer transaction from ledger settlement).
and is it necessary to use this functionality? what will be the impact if we don't use this functionality.
Ledger settlements are actually done manually and I have not seen systems were users manually settled customer transactions because that is actually done automatically in AR. Can you find out why the customer transactions show ledger settlements (who has done this and why)?
Ledger settlements are an optional functionality. There is no necessity to use it if not needed.
[quote user="Ludwig Reinhard"]
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Hi Ludwig ,
Referring to above example ,let's assume that business user posted a debit entry $1000 to provisional account and a credit entry of $800 at the end of the month or year ,then application would show an account net balance is $200 ,then what is the importance to do ledger settlement and how does this functionality help in the real business world ?
Hi lally,
The ledger balance will display as $200 as you mentioned.
The advantage of doing that is that you can quickly track how much has for example been accrued in order to assess whether an accrual balance needs to be adjusted upward or downward.
What I experience often is that auditors come and say we need an accrual of at least $500 at the end of the year.
If you can quickly identify the balance on the account directly this might help.
However, you are right. The advantage of ledger settlements is not that big because you can also get the balance information through a report or the trial balance list page.
Yes you can settle customer/vendor trans actions. They have to add up to zero,..so what is there to settle on lets say the vendor account? (in our company general ledger 1600)
1) an invoice and a credit note for exactly the same amount ( or more credit notes making up the exact amount of the invoice )
How did these get on the vendor account => invoice journal.
Settling the General ledger account 1600 will make it so you can use the "show only open" function on general ledger 1600, (all vendors in a great heap)
The sub administration...individual vender accounts will not be settled. There you should use the invoice journal to book the credit notes and settle the invoice while doing this.
(or enter the credit note-s and go to Accounts Payable=>Vendor Details=>select the vendor=> Functions=>Open transaction editing=>choose to settle amounts=>Update)
That's a lot of clicks, just use the invoice journal for this, and settling 1600(vendors) is a waste of time. Just check if the balance of 1600 equals the open invoice transaction report.
2) an invoice and a payment.....
The same story, use what-ever you book a payment with to settle an open invoice.
When do we settle general ledgers... well let me give you an example. We use general ledger 2000 to book money transfers between our banks. On the last few days of the year I transferred money from one of our bankaccounts to another of our own accounts and even one to petty cash. I can see the balance of G/L account 2000 but I can not see what it is made up of (show only open does not work), so when transferring money I book it on G/L account 2000 and when receiving the money I book it on G/L account 2000. Every time I receive the money I go to Ledger settlements and settle the two postings. Now I can use the show open only to see what is still "being processed by the banks"
There are more general ledgers that I settle, just because our auditors ask for specifications of the balances of some general ledger accounts. Mostly the accounts that should be zero at a certain time. (precalculations, accruals and sadly in my case also the stock accounts due to sloppy work by our AX supplier)
note.
ledger settlements can only be done when balance is ZERO. Settlements on vendors and customers can be done with leaving a balance to settle on a later date or time.( lets say a.. credit note for damages not equal to invoice for initial delivery makes a balance to be paid )
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