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. No | Goods Description | Size | Quantity | Comments | |
| 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:
- Receive invoices and purchase orders for the goods.
- Supervise unloading of goods at the location.
- 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.
- Inform the supplier in case of shortfall in quantity or disputed goods.
- 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.
- 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.
As an expert in the field of procurement, inventory management, and accounts payable processes, my in-depth knowledge and hands-on experience make me well-equipped to discuss the importance and intricacies of the Goods Received Note (GRN). With a profound understanding of the subject, I can attest to the critical role that the GRN plays in ensuring smooth business operations and financial accuracy.
The Goods Received Note, commonly known as GRN, is a fundamental document in the accounts payable process for businesses. It serves as tangible proof of the delivery of goods from a supplier to a customer, providing a comprehensive record that is crucial for various aspects of business management.
The GRN is generated by the store's department upon receiving goods and involves a meticulous process. The store's department inspects the delivered goods against the purchase order, carefully examining their physical condition. Only when all goods are verified to be in perfect condition does the department issue the GRN. In cases where the received goods deviate from the purchase order specifications, the buyer has the right to reject them, and a new purchase order is initiated for the rejected batch.
The issuance of the GRN holds significant responsibilities for the store's department, and the document is distributed in multiple copies to the supplier, procurement department, accounts department, and for retention by the store's department. This meticulous approach ensures that all relevant parties have a record of the goods received.
The uses of the Goods Received Note are multifaceted. It serves as a confirmation mechanism for both the supplier and the buyer, acting as a reference for future cases such as dispute resolution and audit trails. The GRN also plays a vital role in validating the quantity and quality of received goods, aiding in inventory management and assisting accountants in confirming inventory balances and updating stock ledgers against purchase entries.
The format of the Goods Received Note is standardized to include crucial information such as the name of the supplier, time and date of delivery, and details of the received products, along with the necessary signatures of the stores manager and the supplier's representative. This structured format ensures that all pertinent information is documented for future reference.
The process to issue a Goods Received Note involves receiving invoices and purchase orders, supervising the unloading of goods, conducting physical verification, and informing the supplier in case of discrepancies. Once verified, the store's department issues copies of the GRN, which are then distributed to relevant departments. The accounts department, upon receiving the GRN, updates the store's ledger account, completing the cycle.
In conclusion, the Goods Received Note is a concrete proof of goods receipt that not only helps in maintaining accurate inventory records but also serves as a crucial document for dispute resolution and financial accuracy. Its role in reconciling supplier invoices with received goods ensures that businesses make accurate payments, and its status as documentary evidence makes it indispensable for accountants in maintaining error-free account balances.
