written by | May 30, 2022

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GRN Full Form and How It Works - Meaning, Uses, and Format

GRN, also known as Goods Received Note, acknowledges the delivery of goods by a particular supplier and the customer's subsequent acceptance.

When a customer makes an order to purchase, and the supplier accepts it, they are generally obliged to provide the order in compliance with the conditions and terms stated in the document. 

Following an order for purchase, once the items are later delivered, the Goods Received Note acts as an acknowledgement of receipt that indicates that the inventory was received and is in line with the payment order issued.

The receipt of the Goods Received Note acts as an acceptable notice that the items have been delivered and have to be recorded in the accounting books.

Did You know?

If by mistake any goods aren’t delivered in a proper manner and are damaged, the individual who was delivering the shipment must write a note instead of this delivery note. After that, the supplier can either forward a replacement or raise the note of the credit for the damaged goods.

Also Read: What are Debit, Credit Note and their Formats?

Features of GRN

Having an accurate and complete GRN is crucial for the process of receiving and paying for goods. The Accounts Payable team will check the GRN against the invoice to ensure accuracy. Here are the most important features of GRN:

  • This document acts as a record of the quality and quantity of the goods received. 
  • A Goods Received Note is an internal document produced by the purchasing and finance departments when a supplier delivers a shipment of goods. 
  • The Stock/Warehouse department uses this document to update inventory records based on the information provided in the Goods Received Note. Consequently, a faster entry into the Warehouse will make the goods available for production or sale sooner.
  • In case of quality problems, the Note will act as proof of the quality and quantity check that the supplier performed before delivery.
  • The note helps to determine whether any items were back-ordered or out of stock. 
  • In case of disagreements regarding quality, the Goods Received Note will serve as a source of conflict resolution and can also prevent unnecessary disputes.
  • Because of its importance in the process, securing a Goods Received Note is an excellent way to avoid legal pitfalls.

What Is to Be Included in Goods Received Note?

After knowing about the Goods Received Note meaning, let’s know what you should include in it. Goods Received Notice is an essential document which has a myriad of functions. Primarily, it helps ensure that both customers and suppliers are competent to keep track of everything on time. It is composed of a variety of various aspects. These include:

  • Product Details and Specifications
  • Name of the Organisation – for both the receiver and supplier of goods
  • Delivery Time and Date
  • Purchase Order Number
  • Name and signature of supplier's representative
  • Product Quantity
  • Name and signature of the receiving person

A Goods Received Note will appear as a non-invoiced item in a supplier inquiry. A Goods Received Note consists of a Header, Product Line, Service Line, Sundry Line, Comment Line and Subtotal Line.

Process of GRN

  1. Receive purchase orders and invoices for the items.
  2. Control the unloading of goods at the point of delivery.
  3. Perform physical checks on the goods received to confirm the quality and quantity of the material corresponding to your purchase orders. Conduct quality tests on a handful of items.
  4. Inform the supplier of shortages in the quantity or dispute (if any) over products.
  5. After verification, the store department can issue duplicates of GRN instead of goods that have been approved. The department's manager and verifier must sign the notes. A copy is provided to the supplier to acknowledge the receipt of goods, and other copies are given to the departments responsible.
  6. When they receive the GRN, the department for accounts will make the necessary changes to the ledger of the store's account.

Importance of Goods Received Note

A Goods Received Note is an essential document for a supplier and customer. It is important to keep all the required information in this document to ensure that it is paid for properly. Below are the essential aspects of a Goods Received Note:

  • It is required by accounting standards to record the transaction when risk is transferred to the customer.
  • The Goods Received Note is an important document that helps establish the date when a purchase transaction is recorded.
  • In the case of suppliers, a GRN is especially important because it allows the accounting function to update records without needing the warehouse manager.
  • A Goods Received Note is a legal document validating all performance obligations in a purchase order.
  • This document is vital for the accounting process.  
  • A large company will produce an order form listing the exact items they want. The supplier must match the goods received in a note to the purchase order. However, a small company may not have the budget to do this. Hence, a Goods Received Note is an ideal solution. If you want to ensure that your goods are delivered on time and in good condition, you should get a Goods Received Note.
  • The Goods Received Note information helps determine the unit cost in the Product Masterfile and stock on hand.

The Benefits of Goods Received Note

Just as important as Goods Received Note meaning is, knowing its benefits is also similarly essential. A Goods Received Note (GRN) is a document that serves as internal proof that you've received the goods. It will show the date and time you received the goods and the proper address of the place from which the goods are supposed to be transported. 

A good GRN will be very helpful to your company in various ways. These benefits are outlined below. However, you should remember that a GRN is not a substitute for a proper invoice.

1). It Helps to Avoid Legal Issues

The benefits of the Goods Received Note are well documented on the invoice. It serves as an important document in the procurement process, which helps to avoid legal issues. This note includes all the relevant information for the payment of a vendor. Hence, it is important to track and store the document for future reference. 

2). GRNs Act as Internal Proof of Goods Received

Goods Received Notes (GRNs) are issued to authorised staff to receive goods or services. Unlike a delivery note, which is a physical action, a GRN acts as an internal proof of receipt. GRN procedures are also required for statutory reporting to HM Customs and Excise. 

A GRN typically contains a Commodity Code and an indicator for inclusion. It also contains information about the goods' physical condition and quantity. The buyer signs and issues a GRN to confirm delivery of the goods, and the seller maintains a record of receipt.

3). They Show the Supplier Related Details

A Goods Received Note is an official legal document that confirms the receipt of an order. It is filled out by the purchaser after receiving goods and is acceptable as proof in court. It shows the supplier's name and the date the goods were received. 

The name and address of the supplier are also shown. The Goods Received Note also lists the type of products purchased, their quantity, rate, price and other details. The note ends with a signature from authorised personnel.

4). Aid in the Accounting Process

With the help of GRN, accountants can confirm the balance of inventory and reconcile the inventory ledger with purchases. This can also help in controlling accounts payable. Any items not paid as per GRN may be subtracted, and suppliers may be able to pay the remainder.

5). They Show the Date and Time of the Issue and Receipt of the Goods

The goods receipt is a document that records the physical movement of items into a warehouse from an external vendor. Warehouse managers usually use it to plan and monitor the stock of materials ordered or produced for sale. The goods receipt shows the date and time of issue and receipt. It is also a critical piece of inventory documentation. The process of goods receipt can be automated with software such as SAP.

What Is a Goods Dispatch Note?

The dispatch note for goods is the supplier's record for the exact order. It is made every time an order is fulfilled or delivered. One copy is provided to the department responsible for dispatching, and another is given to the accounting department. The accounting department uses it to generate an invoice. The invoices are numbered according to order to ensure that they are tracked throughout.

Conclusion

Creating Goods Received Note is not as complicated as it may seem. The Goods Received Note is an acknowledgement from the seller to the buyer that the goods have been received. It acts as a proof of receipt compared to a purchase order. 

Once the Goods Received Note matches an invoice, payment of the invoice is made. The good received note is essential in any organisation's procurement process. Now keep track of your cashflow and manage your incomes and expenses with ease by using the Cashbook app by Khatabook.

FAQs

Q: What is a PO note?

Ans:

A PO note's full form is "Purchase Note." It's basically a purchaser generated document that indicates the products' quantity, quantities and costs the seller will offer to the purchaser.

Q: What can be a good Goods Received Note format?

Ans:

Here's the best format of Goods Received Note:

  1. The vendor's name and the vendor number with it
  2. The delivery's date & time.
  3. The list of products delivered and their quantity.
  4. The store manager's signature & name.
  5. The vendor manager's name & signature.

Q: How can a Goods Receipt Note help you?

Ans:

Using a Goods Received or Delivery Note can help your business get more information about your delivery's input and output.

Q: What is GRN?

Ans:

A GRN (Goods Received Note) is basically a document which acknowledges the goods' delivery to a consumer by the supplier.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.