Settlement document type & is not permitted for final settlement

What causes this issue?

The selected settlement document type &V1& is not defined for final
settlement. The reason for this is that settlement document type &V1& is
not characterized as the settlement document type for final settlement.

System Response

The settlement document type cannot be assigned.

How to fix this error?

Choose a different settlement document type.

Procedure for System Administrators

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

Error message extract from SAP system. Copyright SAP SE.