In the vendor account statement, all types of transactions recorded for the vendors are included. However, not all of this information is necessary. Most of the time, it is superfluous information that makes it harder to understand the content of the account statement.
The system generates settlement transactions to reconcile the financial dimensions when the financial dimensions on the credit entry differ from those on the debit entry with which the settlement is made.
Let’s assume this scenario:
- Credit transaction with financial dimensions 1-2-3 and an amount of -1,000.00
- Debit transaction with financial dimensions 1-2-3-4 and an amount of 1,000.00
If the user settles these transactions, the system generates the following settlement transactions:
1-2-3 1,000.00 debit
1-2-3-4 -1,000.00 credit
This is useful for balancing the financial dimensions set, but these transactions should not be included in the vendor statement because they do not relate to invoices, payments, or purchase orders.