Goods Received Note | Goods Receipt Note | GRN Format

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Goods Received Note | Goods Receipt Note | GRN Format

Every company receives as well as supplies goods; whether it is in the form of raw materials, consumable items, or finished goods. Hence, Goods Received Note / Goods Receipt Note / GRN is an essential document for every purchasing company. It is a vital record maintained by the purchaser. Goods Received Note serves as the internal document for the basis of clearing invoices against goods received and making payments thereof.

Let us now understand every minute detail of what is a Goods Received Note / Goods Receipt Note. What is the importance of goods received note, what information should goods receipt note contain, How does a GRN Format look, when is GRN issued, who issues it, and so on so forth.

What is a Goods Received Note (GRN)?

When a supplier delivers goods to the ordering company, the receiving clerk or store in-charge or store-representative carries out a physical inspection of the goods received. He/She verifies that goods meet the conditions specified in the purchase order relating to quantity ordered, model/make, technical & quality specifications, the price quoted, etc. If required, they intimate the inspection department/end-user for inspection and final approval. Only thereafter, he/she approves the delivery and issues a Goods Received Note.

Thus, Goods Receipt Note is a document that validates that goods received are exactly per the Purchase order raised by the company and serves as an internal document for proof of the physical receipt of goods from the Supplier.

A copy of the GRN is sent to the accounts department, for cross verification against the invoice that will be raised by the supplier. This marks the completion of the purchase cycle.

When is a Goods Received Note Issued/Prepared?

A Goods Receipt note is issued/prepared when the goods received are in the perfect physical condition and adhere to the requirements specified in the Purchase Order.

On the other hand, if all or some of the goods received do not meet the specifications, or some are damaged in transit, then, the receiving company representative, may reject the entire lot or partial lot; as the case may be.

In case of such an event, the Goods Receipt Note will be prepared only for the approved goods and the shortfall will become part of a pending/revised purchase order.

Who/Which Department Prepares a Goods Received Note (GRN)?

It is the responsibility of the stores’ department to prepare the Goods Received Note. Multiple copies are prepared for the reference of all concerned departments such as warehouse/store, procurement, and finance/accounting departments for their reference, records, and actions required (if any).

What is the importance of Goods Received Note (GRN)?

Goods Receipt Note is a crucial document which is referred by several teams such as Stores/Warehouse, Procurement & Accounts/Finance. Why is the Goods receipt note important for each of them?

Stock/Warehouse – Update the inventory records as soon as goods are received based on GRN. The faster the entry in the Warehouse, the earlier goods are available for production process/sales, as the case may be.

Procurement/Purchase – To mark the completion of execution of Purchase Order and evaluate the performance of the procurement team

Finance Team for Accounts Payable – To cross-check the Goods Receipt Note against Invoice raised by the supplier before making the final payment. Having GRN on-time enables making timely & accurate payments.

What is the Goods Received Note Format (GRN Format)?Goods Received Note Format

Goods Received Note Template in Excel Format

What information is contained in Goods Received Note (GRN)?

  • Name & Address of Supplier
  • Purchase Order Details
  • Details of Products delivered – Quantity, Make, Specifications, Price
  • Date and Time of delivery
  • Name & Signature of Store Manager / Representative
  • Name & Signature of End User / User Department

What are the Benefits of Generating GRN Electronically or via ERP Software?

Earlier when Goods Receipt Notes were prepared manually, the activities associated with GRN such as informing each concerned department, making numerous paper copies and distributing to all departments was time consuming and cumbersome activity. Moreover, there were chances of human errors and papers being misplaced, etc. All this could lead to chaos and slow processing of goods receipt notes. Stock information was not up to date and at times it even suppliers chasing for payments, arguments over exact quantities requested/delivered. sometimes even resulted in delayed payments. Let us now see how generating Goods Received Note via ERP Software helps overcome all these above-mentioned problems.

1. Business Discipline

Objectives of purchase department are to obtain right quality materials, in the right quantity, at the right time. GRN ensures business discipline that goods are received only in the quantity ordered and within the desired timeframe. exactly as per quality & terms of Purchase Order. Thus goods received cannot exceed the purchase order quantity and value. You can establish rules such as “Purchase of raw material items should be accepted only after inspection intimation” etc. GRN provides a mechanism to establish business discipline of receiving the materials

2. Easier Information Sharing

When Goods Received Notes are generated via ERP it becomes easier to share GRN information simultaneously to all concerned departments including end-users and/or quality/inspection departments, via email/SMS or alerts/notifications as per the workflow specified in ERP. This ensures easier, faster almost real-time information sharing and saves a lot of paperwork and efforts in manual distribution.

3. Real-Time Stock Updating

GRN provides a breakup of Consumable, Raw Material, Assets purchased. As soon as Goods Received Note is entered in the ERP, Stock Quantity & Stock Value are immediately updated via ERP in real-time. This facilitates appropriate stock records and accurate accounting of goods received.

4. Accounts Payable 

Goods Receipt Note forms the base document for a variety of purposes such as Invoice Booking, Freight Invoice, Letter of Credit Discounting, Transport Payments, Maintaining appropriate Warranty Information, etc. Having digital/electronic GRN ensures correct and accurate records. It also ensures faster processing, approval and payments of the GRN.

5. Reports, Trends & Analysis

With Goods Received Notes stored in digital formats and ERP software, it becomes easier to generate a variety of reports as per the desired criteria.  E.g. You can generate reports to see quantity/amount of goods received, frequency of receipt of goods, weekly/fortnightly/monthly, whether there were any delays, rejections if they were about specific material or supplier. All this helps to identify the problem areas and take corrective actions to improve the efficiency of supply chain management.

Summary

Goods Received Note is an internal document that validates goods are received in perfect physical condition as per terms & conditions specified in the Purchase order and enables cross verifying invoices raised by suppliers and making accurate payments. GRN can be prepared online via ERP or in Word Format or Excel Format. GRN helps maintain accurate inventory information & plan purchases to save procurement costs

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