Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Goods Received Note — Everything A Procurement Professional Should Know
Key takeaways
- Goods received note is a formal record that serves as an acknowledgment receipt of goods from a supplier.
- It also serves as evidence that both parties fulfilled their obligations under the contract, acting as a quality control tool.
- Goods received note allows clients to confirm receipt of all purchased items and notifies suppliers of any issues, fostering quick response and resolution.
In the procurement process of an organization, a lot of data is managed to ensure that everything is operating and aligned with the goals of the organization. One such data is the inflow of goods and that is where the Goods Receive Note comes in.
For this article, we will delve into the concept of Goods Receipt Notes. We will take a look at its process, function, and importance to the procurement process
After reading this article, you should have a better understanding of the importance of the Goods Receive note and how it can impact the entire procurement cycle of your organization.
What is Goods Received Note?
A Goods Received Note, abbreviated as GRN, is a formal record that is utilized in the context of the inventory and procurement processes. It serves as a receipt to acknowledge the receipt of goods from a supplier. The GRN is created when a business or organization places an order with a supplier and receives and inspects the delivered products.
A GRN’s main function is to keep track of the specifics of the items that the company has received. It serves as a link between the financial department, the warehouse, and the purchasing division.
A Purchase Order (PO), which contains all the information about the things needed, is created when the buying department places an order with a supplier. The warehouse crew examines the shipment when the goods are delivered and compares it to the PO.
The Goods Received Note is produced if the quantity and quality of the delivered items are in accordance with the purchase order. Important details like the date of receipt, the supplier’s name, the PO number, item descriptions, quantities, and any irregularities discovered during inspection are all included in the document.
Importance of Goods Receive Note
Goods Receive Note gives an organization a better understanding of their input and output and gives their clients a method to confirm they have gotten all of the items they have paid for. If anything is missing, the recipient can immediately respond and get in touch with the sender, notifying them of both of the issues with the delivery using the delivery note.
Additionally, the Goods Receipt Note serves as a record that both parties have complied with their obligations under the contract and preserves that information for future use, should it be necessary or if disputes develop.
In that way, it works as a quality control tool since it allows for the quick recording of any discrepancies or flaws found during inspections. Additionally, the GRN creates supplier responsibility by offering official proof of items received that may be utilized to remedy any discrepancies.
Furthermore, the GRN’s contribution to data transparency and accuracy makes reporting and strategic decision-making easier, and its adherence to regulations and support during audits emphasize how crucial it is to have regulations in place.
The Goods Received Note, which has an impact on inventory correctness, quality control, financial integrity, and operational excellence, acts as the keystone of the procurement process.
Process of Generating Goods Received Note
Here’s a step-by-step coverage of the process of generating Goods Received Note.
1. Purchase Order Generation
Creating a Purchase Order (PO) and listing the items to be purchased from the supplier starts the process. Information on the supplier, item descriptions, quantities, agreed-upon prices, delivery dates, and any particular terms and conditions are all included in the PO.
2. Goods Receipt
The receiving or warehouse personnel shall carry out a thorough check on the shipment when it is received from the supplier. They’re going to check that the supplied items are in accordance with the details of the purchase order. The quantity, quality, condition, and specification of the goods shall be checked as part of this inspection.
3. Comparison with Purchase Order
The receiving personnel shall then carry out a cross-check on the received goods, in accordance with the information contained in the purchase order. They shall make sure that items are described, the quantities and related data correspond with what has been ordered.
4. Potential Document Discrepancies
The Goods Received Note shall be updated if any irregularities are found during the inspection, such as broken goods, inaccurate numbers, or changes in quality. In order to address any concerns with the supplier and guarantee correct accountability, this is an essential step.
5. Goods Received Note Creation
The goods received note shall be drawn up by the receiving personnel on the basis of the results of the inspections. This document shall contain important information, for example, the GRN number, vendor details, purchase order number, date and time of receipt, item description, received quantity, or any discrepancies identified during an inspection.
6. Inventory Update
Once the GRN is completed and signed, an update of inventory records shall be carried out to record quantities that have been received. In order to ensure that available goods are accurately recorded, the new stock level shall be adjusted in the inventory management system.
7. Supplier Notification
A copy of a GRN should be forwarded to the supplier after completing and verifying the goods received note. The fact that goods have been received according to the purchase order is confirmed by this notification.
8. Payment
In the payment procedure, the Goods Received Note is essential. The GRN is used by the finance department to compare the products received with the invoice from the supplier. After receiving confirmation of the amounts and quality and resolving any issues, payments are handled.
9. Record-Keeping
The future reference and audit process requires a good organization of the record-keeping system. For easy retrieval and compliance purposes, the final goods received note is kept in a secure place.
Contents of a GRN
Here a the typical information contained within a Goods Received Note:
1. Supplier Information
The GRN starts by stating the vendor’s name, address, and contact details. Easy identification and communication with the supplier depend on this information.
2. Purchase Order Details
The relevant PO number is referred to in the GRN. When there are several orders involved in larger procurement procedures, this connection improves traceability and helps prevent confusion.
3. Date and Time of receipt
The GRN shall list the day and time of arrival of the goods. This time is essential for tracking the aging of inventory and its calculation of delay times.
4. Item Details
Each item you receive is presented in a clear description, which includes part numbers, specifications, and any additional characteristics that are of relevance. In order to identify similar items and provide accurate management of the stock, this type of detail is helpful.
5. Quality Inspection
To ensure that products comply with the requested standards, warehouse personnel shall carry out quality checks. The GRN shall record any damage or defect which is detected in the course of the inspection.
6. Authorized Signatures
The GRN requires signatures from authorized personnel, such as the receiving staff and the finance department, to verify the receipt and acceptance of the goods.
Software tools for Managing GRN
Here are some software tools for Managing GRN that you may want to know about!
1. Odoo Inventory
Odoo is a suite of open-source business apps that cover all your company needs: CRM, eCommerce, accounting, inventory, point of sale, project management, etc. Easily analyze, forecast, and efficiently plan your purchase orders with automated rules.
2. Kissflow
Kissflow is a cloud-based procurement software tool that helps businesses manage their procurement process from requisition to payment. It includes supplier management, contract management, and spending analysis.
3. TranZact
TranZact is a cloud-based, inventory management software. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.
Conclusion
For effective procurement management, the Goods Received Note is a crucial instrument. It enables firms to manage inventory accuracy, establish supplier accountability, and preserve quality standards by precisely documenting the receipt of items. It is an essential tool for organizations to improve accountability, optimize inventory management, and promote efficient departmental communication.
Adopting digital solutions improves the GRN process even more, resulting in more efficient supply chain operations and smoother operations overall. Adopting contemporary methods, such as digitizing the GRN process, can significantly impact a company’s competitiveness and performance in this fast-paced corporate climate.
Frequentlyasked questions
What is Goods Received Note?
A Goods Received Note serves as a receipt to acknowledge the receipt of goods from a supplier.
Why is it important?
Goods Receive Note gives an organization a better understanding of their input and output and gives their clients a method to confirm they have gotten all of the items they have paid for.
What is its purpose?
A GRN’s main function is to keep track of the specifics of the items that the company has received. It serves as a link between the financial department, the warehouse, and the purchasing division.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
