Settlement involves transferring all the costs incurred during production from one object to another. In KANBAN, the costs are sent by the cost collector and are received by the manufactured material.

The costs are transferred in two steps:

1. When the goods receipt is posted, the system valuates the stock change using the price recorded in the material master record.
2. The system passes on the difference between the actual costs incurred and the posting generated when the delivery is made. If the material is valuated with the moving average price, the costs go to the material account. If the material is valuated with the standard price, the costs go to a price difference account.

During settlement, offsetting entries are generated automatically to credit the cost collector. When the material produced is delivered to stock, the cost collector is credited and the balance sheet account of the material is debited.

Before you can carry out settlement in KANBAN, you must maintain valid settlement parameters. The settlement parameters include a settlement profile and a settlement structure.