Understanding the Settlement Mechanism in Microsoft Dynamics AX Settlement is an accounting transaction that occurs on accounts payable, accounts receivables, and general ledger. This transaction is used mainly for settling vendor invoices against vendor payments or advanced payment, and customer invoices against customer collections or advanced collection. Settlement could occur on general ledger transactions as well. It is necessary to classify posting profiles of the vendor and customer in the opening balance since it will affect the settlement process. The settlement transaction affects vendor and customer balances, and it is reported in the vendor or customer statement report that identifies the following: Vendor The open (unsettled) invoice and payments The closed (settled) invoiced and payments Vendor balance Customer The open (unsettled) invoice and collections The closed (settled) invoiced and collections Customer balance A settlement transaction could occur during a payment o...