SAP Settlement Rules, Profiles, and Allocation Structures

By Tanya Duncan

SAP settlement rules, settlement profiles, and allocation structures work together to transfer costs from a sender, such as an order or WBS element, to the appropriate receivers. The profile defines the permitted framework, the rule specifies the receivers and distribution, and the allocation structure controls how source costs are represented during settlement.

These concepts apply to project settlement and to other SAP cost objects, including production orders, process orders, and real internal orders. The exact cost flow depends on the sender, receiver, and accounting scenario.

Table of Contents

• Three Settlement Controls Compared
• Settlement Profile
• Settlement Rule
• Allocation Structure
• Settlement Example
• Common Configuration Issues
• Conclusion
• Glossary

Three Settlement Controls Compared

Table 1 shows how the three controls complement one another.

Settlement Profile

The settlement profile is the central control for settlement. It determines whether actual costs must, may, or must not be settled, which receiver categories are allowed, and which allocation structure is proposed. It also controls distribution methods and other settlement parameters.

For internal orders, the order type supplies the default profile. In Project System, the project profile supplies settlement defaults. Sales order scenarios have their own determination, such as through the requirements class. A profile provides the framework; it does not identify every individual receiver.

Settlement Rule

The settlement rule belongs to the individual sender. Its distribution rules identify the receiving objects and their shares, for example, 100% to a cost center or a percentage split between two eligible receivers. Settlement type and validity determine when the distribution applies.

Rules may be maintained manually or generated automatically, depending on the object and configuration. For more context, see SAP Internal Orders: Types, Planning, and Settlement.

Settlement commonly forms part of period-end closing, but costs do not always settle to a cost center. Investment measures may settle to assets under construction, while manufacturing orders can settle to materials or other permitted receivers. Statistical internal orders are not settled.

Allocation Structure

The allocation structure groups source cost elements into settlement assignments. For each assignment and receiver category, it specifies whether settlement retains the original cost element or uses a designated settlement cost element. This controls the level of cost detail available on the receiver.

For example, material, labor, and external service costs can be grouped separately. The allocation structure controls cost element mapping; the settlement rule identifies the actual receivers. If different source costs must go to different receivers, a source structure can support that requirement together with the settlement rule.

Settlement Example

A real internal order collects $10,000 for a marketing event. Its settlement profile permits cost center receivers. The settlement rule assigns 100% to the marketing cost center, so settlement credits the order and debits that cost center with $10,000.

The allocation structure determines whether the receiving posting retains eligible original cost elements or uses configured settlement cost elements. The receiver comes from the settlement rule, rather than automatically from a finished material's profit center.

Common Configuration Issues

Before running settlement, check the following:

• Missing or invalid rule: Confirm the receiver, shares, validity, and settlement type.
• Receiver not allowed: Check the permitted receiver categories in the settlement profile.
• Unmapped source costs: Ensure the allocation structure covers all relevant debit cost elements without conflicting assignments.
• Missing settlement cost element: Check the mapping required for each receiver category.
• Unexpected result: Review the sender balance, accounting scenario, and settlement log. Use a test run before posting.

Conclusion

Start with the business cost flow: identify the sender and intended receivers, select a suitable settlement profile, maintain the settlement rule, and confirm the allocation structure. Test representative postings to verify both the amounts transferred and the cost detail retained.

Glossary

Allocation Structure

Configuration that groups source cost elements and defines how they are settled for each receiver category.

Process Order

A manufacturing order used in process industries, typically based on a material list and master recipe with operations and phases.

Production Order

A manufacturing order used in discrete production, typically based on a bill of materials and routing.

Sales Order

A customer request for goods or services. A sales order item can collect costs and revenues when the relevant accounting scenario is configured.

Settlement Profile

The control parameters defining permitted settlement receivers, settlement requirements, and default settlement structures.

Settlement Rule

The sender-specific instructions identifying receivers and how costs are distributed to them.

Source Structure

A grouping of source costs used to distinguish settlement distributions by cost origin.

WBS Element

A component of a work breakdown structure used to organize and control project work and, where configured, collect project costs.

Reference Materials

• SAP Learning: Explaining Periodic Credit Postings
• SAP Learning: Executing a Settlement