How To Fix KD506 - Define a settlement cost element for receiver type &

SAP Error Message - Details

• Message type: E = Error

• Message class: KD - CO Settlement

• Message number: 506

• Message text: Define a settlement cost element for receiver type &

What causes this issue?

In allocation structure &V2& (controlling area &V3&), you did not
define which cost element should be used when settling costs/revenues
of the sender. Nor did you define receiver type &V1&.

How to fix this error?

Assign a different allocation structure to the settlement sender (->
Master data -> Settlement rule -> Goto -> Settlement parameters), or
maintain allocation structure &V2&.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message KD506 - Define a settlement cost element for receiver type & ?

  The SAP error message KD506, which states "Define a settlement cost element for receiver type &," typically occurs in the context of controlling (CO) when you are trying to settle costs from one cost object to another, such as from an internal order or a project to a cost center or another internal order.
  Cause:
  The error arises because the system requires a settlement cost element to be defined for the specific receiver type you are working with. The receiver type could be a cost center, internal order, or any other object that can receive costs. If the system cannot find a defined settlement cost element for that receiver type, it will trigger this error.
  Solution:
  To resolve this error, you need to define a settlement cost element for the relevant receiver type. Here are the steps to do this:
  
  
  Access the Configuration:
  
  Go to the SAP Easy Access screen.
  Navigate to the following path: 
  SPRO -> SAP Reference IMG -> Controlling -> Internal Orders -> Settlement -> Define Settlement Cost Elements
  
  
  
  
  Define Settlement Cost Elements:
  
  In the configuration screen, you will see options to define settlement cost elements.
  You need to specify the receiver type (e.g., cost center, internal order) and assign the appropriate cost element that will be used for settlement.
  
  
  
  Check Existing Settings:
  
  If you are unsure which cost element to use, you can check existing settings for similar receiver types to see what has been defined previously.
  
  
  
  Test the Settlement:
  
  After defining the necessary cost elements, try to perform the settlement process again to see if the error persists.
  
  
  
  Related Information:
  
  Receiver Types: Common receiver types include cost centers, internal orders, projects, and profitability segments. Each type may require different cost elements.
  Cost Elements: Cost elements are used in SAP to categorize costs. They can be primary (directly linked to financial accounting) or secondary (used for internal controlling purposes).
  Transaction Codes: You may find it useful to use transaction codes like KO88 (for order settlement) or KOB1 (for order line items) to test and analyze the settlement process.
  Documentation: Always refer to the official SAP documentation or your organization's SAP support team for specific configurations and best practices tailored to your system.
  
  By following these steps, you should be able to resolve the KD506 error and successfully define the necessary settlement cost elements for your receiver types.