Goods Received Note (GRN) is a document issued by the customer to acknowledge the receipt of goods from a supplier. It is crucial in the procurement process of your organization.
You need a smooth and hassle-free procurement process for your business. It keeps things organized and also helps to form long-term relationships with your suppliers. Moreover, you can keep track of your supply data for future requirements.
That’s where a GRN makes your life easier. This article will take you through everything you need to know about a Good Received Note.
Goods Received Note Meaning
A Goods Received Note is a record that acknowledges the delivery of goods (products or services) by a particular supplier. It helps you compare the goods ordered with the goods delivered.
Goods Received Note is prepared by the store department, when they verify that all the goods ordered have been received in perfect condition.
Once you receive the goods, your store’s department will inspect them. They will check if the quantity of goods matches that of the purchase order. Furthermore, they will examine the physical condition of the goods.
Thus, a GRN gets issued only when the goods received match the specifications in the purchase order. What happens when some items fail to meet the required standards? You may reject them and make a fresh purchase order while issuing a GRN for the approved goods.
Importance of Goods Received Note
Imagine there’s no record or proof of the goods delivered by a supplier. What if some quality issues arise? That’s where the importance of Goods Received Note lies.
Thus, a GRN serves as a reference for future disputes. Plus, it also acts as an internal record for the warehouse. You can update your inventory records based on the Goods Received Note.
It’s also an important document for the accounts team. They release payments to the supplier based on the goods mentioned in the GRN.
Therefore, a Goods Received Note is indispensable for the smooth operation of your business.
Uses of Goods Received Note
Validates the Quality and Quantity of Goods
GRN helps to verify the quality and quantity of goods received from the supplier. When the supplies reach the gates of the warehouse, the GRN is the only document that helps to check whether the goods match the order.
The GRN gets issued to the supplier only if the goods match the description in the documents.
Helps in stock and inventory management
A Goods Received Note, also known as Goods Receipt Note, are records of the fact that the organization has received deliveries of the supplies ordered. Thus, these supplies should reflect in the warehouse data.
The GRN helps to keep track of the inventory. You are informed about the exact stock of items in your company.
Moreover, a Goods Received Note helps in the faster entry of goods to the warehouse. That’s because you already have an accurate record of goods. Thereby, your supplies are available for further processing or sale without delay.
Validates Invoices Through Three-Way Matching
The three-way matching process is an excellent way to reduce billing fraud in your organization. Let’s see how it works and what role the GRN plays in it.
In three-way matching, the supplier invoice gets matched with the supply request note and goods received note. Thus, you get the confirmation that –
- You requested a certain quantity and quality of supplies (supply request note)
- The supplier delivered the goods satisfactorily (testified by the goods received note)
- The supplier is invoicing only for the delivered quantity at the specified price (supplier invoice)
- Thus, this three-level checking ensures that there are no fraudulent invoices and you aren’t paying extra money.
Record for the future
In case of conflicts and legal disputes, the goods receipt note will act as a reference. It will help you resolve the conflict with the supplier over quality and other issues.
Goods Received Note Format
A goods receipt note includes all the information that helps your organization and the suppliers to keep track of the quality and quantity of goods supplied. It also serves as a kind of binding agreement between the two parties.
Let’s look at an ideal goods receipt note format. To ensure a seamless goods received note process, the format should include the following information:
- Name of the organizations (of both receiver and supplier)
- Product details including quantity, dimensions, color, etc.
- Delivery date and time
- Name and signature of the supplier
- Name and signature of the receiver
- Purchase Order number
Process of Issuing Goods Received Note
You get the purchase order and supplier’s invoice.
A representative controls the unloading of goods at the delivery point.
Your representative inspects the goods to confirm that the quality and quantity correspond to the purchase order.
The supplier is informed if there is any shortage or dispute.
After examination, the store department issues a duplicate of the GRN to the supplier. The GRN gets issued only for the goods approved.
The store department’s manager and the supplier sign the GRN to acknowledge the delivery of goods.
The accounts department receives the GRN and makes necessary changes to the company’s account.
Issues with Processing of Goods Received Note
Procuring supplies is quite a challenging process. Thus, some issues can crop up even while processing the GRN. It is recommended that you are aware of these issues, and are prepared so you can handle them in a seamless manner.
Lack of proper communication with suppliers
The bigger your organization gets, the more complex the internal operations become. Let’s say you discover an issue with some products while test running. But, informing the supplier might take a long time, especially if you have complex internal hierarchies.
Thus, unnecessary delays could arise, causing trouble for both your company and the supplier. You could get stuck with a few unsuitable goods and the vendor’s payment might get stuck too.
Slow turnaround times
Usually, the store department issues the GRN immediately after the delivery of goods. However, there might be delays when there’s a large quantity of goods involved. That’s because your organization will have to test the goods before issuing the GRN.
Errors in Recording
You need at least three copies of the GRN. The ordering department, the procurement team, and the supplier need one copy each. Additionally, you may have to send another copy to the accounts department.
It’s quite natural for humans to make errors while entering minute pieces of information. And that would cause unnecessary delays in invoicing and other processes.
Huge admin workload
Preparing and issuing GRNs is a detailed activity. Along with it, comes the task of managing the entire procurement process. Envision a situation wherein your team encounters an issue. They might get overburdened, affecting the overall organizational efficiency.
Manage Your GRNs effortlessly with Tranzact
A GRN is immensely helpful for your organization. But processing it takes a lot of time and effort. How about an automation software that manages all your GRN requirements for you?
That’s where TranZact comes in. It is a digital transformation platform that streamlines all your organization's processes so that you can keep your GRN-related worries aside. TranZact helps you manage everything from procurement to dispatch. Moreover, with TranZact, you get support with your verification and invoicing needs too.
FAQs on Goods Received Note
1. What is goods received note vs delivery note?
Goods received note is prepared by the customer to acknowledge the receipt of a particular quantity and quality of goods from the supplier. However, a delivery note is prepared by the supplier to record the type and quantity of goods delivered.
2. Who prepares and issues goods received note?
The customer prepares the goods received note. It is usually prepared by the store department.