Contract Settlement in SAP S/4HANA

Once you have created a contract in SAP S/4HANA, you should review the details.

The review process for contracts is customizable to fit a company’s specific requirements. We can handle this by allowing users to settle their own contracts and having stricter controls over the release of payments, ensuring a dual-control process is set up in security, or using SAP S/4HANA’s workflow to ensure that multiple people review the contracts, as follows.

Dual Control

We can implement security measures on the activity types of a contract so that only certain users can create, settle, or approve them. The downside of this approach is that some users will always be designated as the creators and a different group of users will always be the approvers. Since a user can’t both create contracts and approve other users’ contracts, this may not be the best solution for smaller treasury departments.

To run the settlement portion of a transaction, we use the Process Financial Transaction app or Transaction FTR_EDIT. The app for this transaction is shown in this figure.

To settle the transaction, we enter the Company Code and Transaction ID and then click on the Settle button (see figure below). The next screen will show the transactions details and structure that we saw in the Create Financial Transaction app. Once we have reviewed everything, we can save the transaction. This completes the settlement process, and the Activity for the transaction will be updated from Contract to Contract Settlement. The exact flow and statuses of the contracts are dependent on the configuration for the transaction type.

Workflow

Workflows can define the release procedures for each step of the contract creation and editing process. Creation of and changes to the contract can kick off a workflow that is sent to the approver’s worklist and has to be released before the creation of or edits to the contract are active. When a transaction is in a workflow, we can approve the transaction in the My Inbox app or Transaction SBWP.

Conclusion

Contract settlement in SAP S/4HANA brings structure, control, and transparency to the lifecycle of treasury transactions. Whether a company relies on dual-control security, workflow-driven approvals, or a combination of both, SAP S/4HANA provides the flexibility to match its internal oversight requirements. By reviewing contract details, settling transactions through the Process Financial Transaction app, and leveraging workflow approvals where needed, organizations can ensure that every contract moves through a consistent, auditable process. With the right configuration, these tools not only streamline operations but also strengthen financial governance across the treasury function.

Editor’s note: This post has been adapted from a section of the book Treasury and Risk Management with SAP S/4HANA: The Comprehensive Guide by Luke Carlson, Andrew Carlson, and Jeffrey Lasecki. Luke has over 18 years of experience in SAP Treasury and Risk Management, and has delivered SAP treasury projects to more than 25 companies across the globe. Andrew began working with SAP treasury solutions in 2009 first as a business user and soon after as a consultant. Jeffrey has specialized in SAP Treasury and Risk Management since 2006 and has worked with clients across North America and Europe in the areas of cash management and treasury.