What Is a Goods Received Note (GRN)?

The goods received note format is a comprehensive report and evidence of received goods, often called a shipping notice. It also acts as proof of product delivery to customers, providing crucial details such as the delivery date and order amount.

Internally, companies utilize the GRN even when transporting products from mills to various warehouses in different areas. It is also employed to move core-building materials to respective construction sites efficiently.

By implementing the GRN in these scenarios, companies mitigate the risk of fraud or errors while enabling accurate documentation of inventory transfers for accounting purposes.

Therefore, In simple terms, the GRN format serves as a comprehensive list of purchased products, acting as a tangible record of goods being handed over to the owner.

When Is a Goods Received Note Prepared/Issued?

A good received note is generated when the delivery of the goods is in excellent physical condition and they comply with the specified requirements outlined in the purchase order. The GRN serves as an official acknowledgment of goods receipt.

However, there are instances where the received goods fail to meet the specifications or sustain damage during transit. In such cases, the representative of the receiving company reserves the right to reject either the entire lot or a portion of it, depending on the circumstances.

When a rejection occurs, the goods receipt note format will only be prepared for the approved goods that meet the required standards. The shortfall resulting from the rejected goods becomes part of a pending or revised purchase order, ensuring proper documentation and follow-up actions are undertaken.

Who Prepares a Goods Received Note?

The goods received note is prepared by the relevant stores' department. Multiple copies of the GRN are generated for reference by various departments to ensure effective communication and proper documentation. It includes the warehouse, procurement, and finance or accounting departments.

Each department relies on these copies to fulfill its responsibilities and take necessary actions if required. The GRN is a valuable reference document, facilitating coordination between departments and ensuring accurate record-keeping throughout the supply chain process.

Components of Goods Received Note

Here are the components of a goods received note document:

Document Header

The document header typically includes the title or label "Goods Received Note" to identify the document's purpose.

Supplier Details

This section provides information about the supplier from whom the goods are received.

Purchase Order Information

The purchase order information section includes details related to the original purchase order, which initiated the procurement of the goods.

Shipment Details

The shipment details section provides information about the transportation and delivery of the goods.

Itemized List of Received Goods

This is a critical component of the goods received note format as it lists each item received from the supplier.

Quantity and Quality Inspection

In this section, the receiving person may record the results of the inspection conducted on the received goods.

Authorized Personnel Signature

This signature of the authorized representative confirms that the goods have been physically received and inspected.

Benefits of Goods Received Note Format

Here are some benefits of goods received note format:

Mitigate Legal Risks

This document ensures transparency and accuracy in financial transactions by including all relevant payment information for vendors.

Internal Proof of Receipt

GRNs contain critical details like commodity codes, inclusion indicators, quantity, and physical condition of goods, providing a comprehensive record for both the buyer and the seller. Hence, it serves as an internal proof of receipt.

Supplier-Related Information

A GRN holds the status of an official legal document validating the receipt of an order. It establishes a tangible link between the purchaser and supplier and can be presented as evidence in legal proceedings.

Streamline Accounting Processes

GRNs play a significant role in accounting, enabling efficient inventory management and streamlined accounts payable processes. Accountants rely on GRNs to reconcile inventory balances, ensuring accurate representation in financial records.

Best Practices for Creating a GRN Format

Here are some best practices for creating a GRN format:

• Use a standardized template and adopt a predefined format for GRNs to ensure consistency and streamline the documentation process.

• Include essential information and provide all necessary details in the GRN, such as supplier information, purchase order details, quantity, and quality inspection results.

• Ensure clarity and readability and present the GRN in a clear and easily understandable format, using appropriate formatting.

• Implement a unique identification system and assign a unique identifier to each GRN to facilitate tracking, referencing, and retrieval of specific documents.

• Integrate electronic GRN solutions. Explore the use of electronic GRN systems to automate and digitize the process, improving the efficiency, accuracy, and accessibility of GRNs.

FAQs on Goods Received Note Format

What is the difference between GRN and invoice?

Goods received note (GRN) is a document used to confirm the receipt of goods. On the other hand, an invoice is a request for payment from the supplier to the buyer, indicating the amount owed for the goods or services provided.

What is the difference between a delivery note and goods received note?

The difference between goods received note vs. a delivery note is that a delivery note is a document issued by the supplier to confirm the physical delivery of goods to the buyer. On the other hand, the buyer prepares goods received note to acknowledge the receipt of goods and verify that they comply with the quality and quantity specifications mentioned in the purchase order.

What is the difference between GRN and PO?

A goods received note is a document that serves as proof of the physical receipt of goods from the supplier as per the buyer's expectations. It includes item descriptions, quantities received, and quality inspection results. And a purchase order (PO), on the other hand, is a document issued by the buyer to the supplier, specifying details of the goods or services required, quantities, agreed-upon prices, and other terms and conditions for the purchase.