Goods received note (GRN) is a confirmation of the goods received from the seller. It is issued by the buyer with multiple copies.
A GRN serves many purposes for the buyer, the shipping company, and the seller.
Let us discuss what is a goods delivery note, how it is issued, and what are its advantages for all parties.
What is Goods Received Note (GRN)?
The goods delivery note (GRN) is a document issued by the buyer to the seller to acknowledge that the order has been received.
Goods received note is issued by the buyer or a customer of the goods. It is issued at a time when the buyer receives the shipment of goods ordered.
A GRN contains several important pieces of information. Most importantly it includes the quantity and description of goods received from the supplier.
A GRN is issued with multiple copies for distribution to all parties involved in the transaction. The buyer, the shipper, and the seller receive a copy of the GRN for their respective records.
Large companies may issue a goods received note when moving goods from one warehouse to another. It can also be used when different departments of divisions buy goods from the parent company. Thus, it can be used as an internal source document as well.
Information Recorded and Format of a Goods Received Note (GRN)
The responsibility of issuing the goods received note is on the receiver. The buyer’s procurement department issues the GRN and is responsible for recording the relevant information.
The information recorded on a GRN is then compared against other trade documents like the purchase order, goods dispatch note, and invoices later on.
A goods delivery note records the following information usually.
- Name of the supplier or the Company name.
- Product Quantity (or multiple quantities for different products received together).
- Product details like size, packaging, brand name, and technical specifications.
- Delivery date and time
- Name and signatures of the authorized person from the supplier.
- Name of the receiving company (buyer’s name)
- Purchase order number
- Name and signature of the receiving person from the buyer.
- Reference or folio number of the document.
- Multiple copies of the GRN.
Here is a sample format of the goods delivery note.
Depending on the goods delivered, both parties can include or exclude information. For instance, if the goods are shipped through a third party, the GRN can include a column for signatures from the shipper as well.
The Process of Issuing a Goods Received Note (GRN)
The process of issuing a goods received note (GRN) starts before goods arrive at the warehouse of the buyer. There are a few important steps that are closely linked with the process but these steps begin before issuing the GRN itself.
Here are a few important steps taken before issuing a GRN.
- The procurement department issues a purchase request and seeks approval from the top management.
- After approval, the procurement department will evaluate different options for the purchase order.
- The buyer will negotiate different terms and conditions with the sellers including pricing, delivery time, product specifications, and payment terms.
- Once both parties agree to the terms and conditions, the buyer will issue a purchase order (PO).
After that, the supplier will start manufacturing the goods ordered by the buyer. Once the goods are ready to be shipped, the seller will issue a goods dispatch note. The seller will also issue an invoice for the same order according to the payment terms.
The process of issuing the GRN goes through the following steps:
- The buyer receives the purchase order copy, invoice copy, and goods from the supplier.
- The buyer starts unloading the goods at the warehouse.
- The procurement department will tally the goods received with the purchase order and record the information on the goods delivery note.
- Once the physical verification of goods is completed, any disputes or shortfalls are recorded that are conveyed to the supplier.
- After that, the buyer company will issue the goods received note with multiple copies to the shipper and supplier.
A copy of the GRN can also be issued for internal records for the reconciliation of invoices.
Uses of Goods Received Note (GRN)
A goods received note (GRN) is an important document that helps all parties involved in a trade transaction.
Here are a few major uses of a GRN.
A GRN is issued by the buyer with multiple copies. It is an important record-keeping document that ensures consistency across different departments of the buyer.
A GRN also helps the shipping company and seller to maintain their records accurately.
The buyer uses the GRN as a source document. It keeps a record of all goods received physically from the supplier.
Thus, a GRN can be used as a tool to help the buyer with inventory management.
Managing Supplier Relations
A GRN can record any alterations, mistakes, or shortcomings from the seller’s side. Therefore, it acts as proof if there is any dispute between the buyer and the seller.
Hence, a GRN helps keep smooth trade relations with suppliers.
Managing Accounting Records
A GRN is an important internal document. The buyer can use copies of the GRN to reconcile the invoices and purchase orders.
Thus, it helps in maintaining accurate accounting records as well.
Importance of Goods Received Note (GRN)
A GRN helps to eliminate trade disputes between the buyer and the seller. It is a solid proof of trade transactions with a verified record of goods transferred from one place to another.
Here are a few important points to remember when using a GRN.
Validating Quantity and Quality of Goods
Both parties work with trust and cooperation. However, new trade relations require time to build trust and faith.
Also, it is important to follow quality control check and balance to ensure smooth trade relations. A GRN helps validate the quantity and quality of the goods received from the seller.
Help in Quality Control
A GRN ensures that the buyer gets full value for money. A goods delivery note is issued after the physical verification of the goods received from the supplier.
Therefore, the buyer can record any disputes and quality check issues with the seller at this stage. This ensures that the buyer receives the best quality products for the price it paid.
A goods received note accompanies other important trade documents for verification and reconciliation purposes.
A copy of the GRN is sent to the finance department for internal records. It helps the buyer reconcile invoices and ensures the company pays only for the products it receives.
Managing Inventory and Stock
Using a GRN means the company always keeps a record of its inventory. Each GRN issued replenishes its inventory and stock records.
Therefore, a GRN is an important document that can help in managing inventory and procurement of new stocks in time.
Used a Source Document
A goods delivery note is issued by the buyer and verified by the shipper and the seller. It can be used as an important source document by the buyer for financial records.
A source document is then used to derive important information like product size, technical specifications, price, and quantity for internal records.
Prevention of Theft and Fraud
A GRN ensures all goods received from the supplier are recorded and stored properly. It prevents any theft and fraud of employees for the buyer company.
Saves Time and Improves Accuracy of Records
A GRN avoids unnecessary disputes between all parties involved in the trade transaction. Thus, it helps save time and improve records for all parties.
Goods Received Note Vs Goods Dispatch Note
A goods dispatch note is issued by the supplier when it ships the goods to the buyer.
A goods dispatch note records the same information as the GRN. However, it is issued by the supplier for its internal record.
A copy of the goods dispatch note is often handed over to the shipper of the goods. The shipping company can use it as a validating document when delivering the goods to the buyer.
Goods Received Note Vs Goods Delivery Note
The goods delivery note (GDN) is also issued by the supplier. It also contains the same information. However, a GDN is sent to the buyer for verification of the goods received.
The buyer can use the GDN to confirm the delivery of the goods. Once the buyer physically verifies the goods, it will sign the GDN for the seller.
The seller can then use the GDN as proof of goods delivery for internal records. However, the buyer can later issue the GRN to further validate the details of the goods received.
In practice, there can be disputes and differences when issuing all these documents. Invoices are only paid when both parties reconcile and agree upon all details.