Settle transactions and undo settlements

  • 15 minutes

This unit explains how to perform a settlement and reverse it in Finance.

View settlements

The View settlements button on the Action Pane provides quick access to the settlement history and detailed information about the settlement transaction. You can also see other transactions that are related to the selected transaction, either because they were part of the same settlement or because they are payments that were created in the same payment journal.

To view settlements, follow this procedure:

  1. Go to Accounts payable > Vendors > All vendors.

  2. Select a vendor that has transactions, and then, on the Action Pane, on the Vendor tab, select Transactions.

  3. Select a transaction to research, by placing a checkmark in the left column, and then on the Action Pane, select Settlement and then Settle transactions.

    Screenshot of Dynamics 365 Finance Settle transactions page.

The Settle transactions dialog box appears and shows the selected transaction and all documents that have been settled against it. This dialog box is similar to the settlement history view, but it includes all related documents.

In the View settlements dialog box, you can perform various tasks. Select one or more vouchers, and then select one of the following buttons:

  • View related – Show all the payment journal transactions that were created in the payment journal that is related to the selected document. In addition, all the settlements that are related to those payments are shown. While you're viewing related payments, the label of this button changes to View settlements. Select View settlements to show only the transactions that were shown when you first opened the View settlements dialog box.
  • View history – Show the settlement history for the vouchers.
  • View accounting – Show all vouchers that are related to the selected documents.
  • Export – Export the selected vouchers to Microsoft Excel.
  • Settle transactions – This button appears only if the original document that was selected wasn't fully settled. When you select this button, the Settle transactions dialog box appears, where you can select transactions for settlement.
  • Undo settlements – This button appears only if the original document that was selected was fully settled. When you select this button, the Undo settlements dialog box appears, where you can undo the settlements that were done for that document.

Screenshot of the Dynamics 365 Finance View settlements page highlighting the buttons.

If a payment was entered and posted, but not yet settled with an invoice or other transaction, you can settle the payment and invoice by opening the Settle open transactions page from the Vendor page.

To view all the transactions in a settlement voucher easily, you can use the Settlement voucher button located on the Settlement history page. This can be helpful when performing reconciliations.

When you select the Update button, the selected payment and invoice transactions are settled. If the payment and invoice transactions are in the same legal entity, the transactions change status according to the following rules:

  • If an invoice is not settled in full, it remains open.
  • If the amount paid is greater than the amount due, the invoice is settled and closed. The payment transaction for the vendor remains open for the amount by which the payment exceeds the amount due.
  • If the payment amount is less than the amount due, the payment amount is subtracted from the amount due, and the invoice remains open. The payment transaction is fully settled and is closed.
  • If the amount paid equals the amount due, the payment and invoice transactions are closed.

Settle invoices and payments

Perform the following steps to settle invoices against payments or make corrections to open transactions.

  1. Go to Accounts payable > Vendors > All vendors.
  2. Select the vendor whose open transactions you want to settle.
  3. To settle open vendor transactions, on the Action Pane, select Invoice > Settle > Settle transactions.
  4. In the Settlement posting date field, select whether to post settlement transactions using the date of the most recent transaction, today's date, or a date that you specify.
  5. Optional: To designate one of the transactions as the primary payment transaction, select the transaction and then select Mark payment. The purpose of a primary payment is to settle all the other transactions that are selected. The transaction date of the primary payment is used in cash discount calculations and exchange rate calculations. If a primary payment is selected, the cross rate can be entered.
  6. Select the Mark check box on the other open transactions to be settled. A red icon indicates that a transaction is already marked for settlement.
  7. Enter the cross rate for each transaction that you selected to be settled with a primary payment transaction in step 5.
  8. Select Update. The marked transactions are offset against each other.

screenshot of settle Transactions for Acme Office Supplies highlighting the Mark check box.

Enable automatic settlement

In some cases, it is more convenient to use automatic settlement of invoices and payments, for example, if a company has a lot of vendors with few payments.

Perform the following steps to enable automatic settlement.

  1. Go to Accounts payable> Setup > Vendor posting profiles.
  2. Select the relevant vendor posting profile.
  3. Select the Table restrictions FastTab.
  4. Select the Allow automatic settlement check box.

Screenshot of the Vendor posting profiles page highlighting the Allow automatic settlement checkbox.

Reverse a closed transaction

When you work with reverse settlements, use the Closed-transaction editing page to edit fully applied or settled transactions that are in history.

You can also use reverse settlements if the bank does not honor a payment or if you use the wrong date or settlement amount.

Note

A settlement is not a transaction, but it is a link between the payment and the invoice. Also note that Finance considers an unsettled invoice as unpaid.

Scenario

The Accounting manager at Adventure Works Cycles, reviews and approves the accounts payable transactions. They realize that a consulting fee was paid twice, and they want to reverse the settlement.

Perform the following steps to reverse a closed transaction.

  1. Go to Accounts payable > Vendors > All Vendors.
  2. Select a vendor record.
  3. On the Action Pane, select Invoice > Undo settlement.
  4. Select the Mark check box to reverse the invoice or payment that is associated with the settlement. The Mark field of the transaction that offsets the transaction marked is selected automatically.
  5. Select how to determine the settlement reversal posting date to use.
    • Latest date - Use the date of the most recent original settlement or select Today's date.
    • Selected date - Use the date that you specify. The date must be the same as, or later than, the date of the most recent transaction involved in the settlement.
  6. Select the Reverse button. The system changes the settlement amount, makes corrections, and changes the status. History displays an overview of settlements for the current voucher.