Goods received note

By Annapoorna

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Updated on: Dec 20th, 2021

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5 min read

Goods Received Note (GRN) is an important proof for businesses that plays a major role in the accounts payable process. This simple document can help businesses avoid undesired burdens in the long run.

Meaning of Goods Received Note (GRN)

Goods received note is a document that acknowledges the delivery of goods to a customer by a supplier. A GRN consists of a record of goods that the buyer has received. This record helps the customer compare the goods delivered against the goods ordered. 

When the buyer receives the goods, the store’s department will inspect them against the purchase order and examine their physical condition. Once they ascertain that all goods are received in perfect physical condition, the department issues the GRN. In cases where the goods received do not match the specifications of the purchase order, the buyer may reject these goods. The buyer issues the GRN only for approved goods and executes a fresh purchase order for the rejected batch.

The responsibility of issuing GRN is on the store’s department. It is prepared in several copies, each for the supplier, procurement department, accounts department, and store’s department retention. 

Uses of goods received note

A GRN acts as a confirmation mechanism for delivering goods for both parties. GRN is applicable in case of many situations:

  • Record for the future: A record of goods received can be used as a reference for future cases such as resolving disputes or audit trails.
  •  Examining goods received: GRN helps validate the quantity and quality of goods received by the buyer. It helps to inform the supplier that the goods are of an acceptable standard.
  • Inventory management: GRN assists in keeping track of inventory levels and thereby helps maintain accurate inventory levels. 
  • Assist in accounting: With the help of GRN, accountants can confirm inventory balances and update the stock ledger against purchase entries. This also helps in managing accounts payable. Items not received as per GRN can be subtracted, and the suppliers may pay the balance. 

Format of goods received note

A GRN must consist of the following features to depict complete information of the delivery:

  • Name of supplier
  • Time and date of the delivery
  • Details of products received include name, quantity, type, etc.
  • Signature of stores manager
  • Signature of supplier/representative of the supplier

A GRN has the following format:

Goods Received Note
Supplier Name:………………………………Date & Time………………………………
Order Number:………………………………Delivery Location………………………………………..
Sr. NoGoods DescriptionSizeQuantityComments
1
2
3
4
Total:
Received By:………………………………..Checked By:…………………………………

Process to issue goods received note

A GRN helps improve efficiency in the delivery stage of the procurement process. The following process flow is followed:

  1. Receive invoices and purchase orders for the goods.
  2. Supervise unloading of goods at the location.
  3. Conduct physical verification of goods received to ensure quantity and quality of materials is as per the purchase order. Perform quality tests on a few materials.
  4. Inform the supplier in case of shortfall in quantity or disputed goods.
  5. Once verified, the store’s department will issue copies of GRN instead of approved goods. The notes must be signed by the store’s department manager and verifier. A copy is given to the supplier to acknowledge receipt of goods. The other copies are sent to the relevant departments.
  6. On receipt of the GRN, the accounts department will update the store’s ledger account.

The goods received note is concrete proof of receipt of goods. It helps maintain inventory records that come in and ensures the right quantity of goods are always available. GRN helps mitigate disputes that could arise due to faulty goods received. It serves as a means to reconcile supplier invoices with the goods received to make accurate payments. It is also documentary evidence that accountants can rely on to maintain error-free account balances.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more

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Quick Summary

Goods Received Note (GRN) is a vital document in the accounts payable process, confirming the delivery of goods to a customer by a supplier. It helps track inventory, validate goods received, and assists in accounting. GRN includes supplier details, order specifics, and signatures. The process involves receiving invoices, verifying goods, and issuing copies to relevant departments.

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