Goods received note

Goods received note
See also
Receiving report Production order Purchase invoice Shipping bill Advising bank Dock receipt Debit Note Ocean bill of lading Purchases journal

Goods received note (GRN) - is the document filled by a store when ordered goods are arriving. Goods are going through specific receiving procedure conducted by intended department in the store. Received goods are compared with the purchase order and a condition of products is checked. If needed, they are inspected in a separate inspection department as well. After all these steps are made, goods received note is prepared. Later on the GRN is used in many other departments such as: a production planning department, a controlling department, a purchase department, an inspection department, an accounts department and a costing department. The accounts department is comparing the prices from the GRN document with the purchase order. If the verification is confirmed, the invoice from the supplier is paid. In case of rejection of goods, the purchase department is asking the supplier to replace the goods.

The goods received note elements

Exact elements of the goods received note are depending on a specific procedure which the company is following. The goods received note might consists of: a good received note number, a good received note date, a purchase order date, a purchase order number, a material code, a description, specifications, a received quantity, an inspected quantity, an accepted quantity, a rejected quantity, a reason of rejection, a unit price, a value of materials, a supplier name, a supplier code, an inspection note number, a store number, a name of person who prepared the document, a signature of perosn who filled the document.

Example of the process including the goods received note

On the base of steps in ordering process described by Alan V. Hore, below there is presented some exemplary sequence of actions including GRN:

1. Placing order,
2. Receiving order,
3. Filling out order form,
4. Confirming order,
5. Receiving order by order office,
6. Giving order to dispatcher,
7. Loading of materials,
8. Preparing delivery docket and giving it to driver,
9. Checking load on dispatch,
10. Checking goods on arrival,
11. Bringing delivery and GRN,
12. Filling out GRN,
13. Sending delivery docket and GRN to accounts department,
14. Forwarding delivery note to supplier,
15. Including amount in supplier's account,
16. Issuing invoice,
17. Checking invoice versus GRN,
18. Authorisation of payment,
19. Collecting of payment,
20. Bringing payment to supplier,
21. Locating payment in bank.

Author: Dominika Zaich

Advantages of Goods received note

A Goods Received Note (GRN) has several advantages that help streamline the receiving process in a store. These include:

• Increased accuracy - since a GRN is filled out when goods are received, it ensures accuracy in the inventory and stock management system. This helps avoid discrepancies and disputes in the future.
• Improved productivity - by having a standardised process of goods receiving, the process is more efficient, and productivity is improved.
• Reduced costs - the GRN helps reduce the costs associated with goods receiving, such as the cost of damage or the cost of having to return items.
• Improved tracking - by having a documented receipt of goods, it is easier to track and trace the goods throughout the store.
• Easier payments - since the GRN serves as a receipt for goods, it can be used to process payments to suppliers more quickly and easily.

Limitations of Goods received note

A Goods received note (GRN) is a document filled by a store when ordered goods are arriving, and is used by many departments in the store. However, there are some limitations to GRN including:

• Inaccurate information: GRN documents are not always accurate, as mistakes can be made when entering the data or when making the comparison between the purchase order and the GRN. This can lead to discrepancies between the actual order and the GRN.
• Miscommunications: Miscommunications between the different departments can lead to discrepancies between the invoice and the GRN, which can result in delays in payment or incorrect payments.
• Lack of clarity: GRN documents can be unclear, as the wording and language used are not always precise. This can lead to confusion and misunderstandings.
• Poor quality control: Poor quality control can lead to incorrect or incomplete information on the GRN, which can cause disruptions to the supply chain.
• Fraudulent activities: Fraudulent activities, such as tampering with GRN documents, can lead to discrepancies between the invoice and the GRN, and can ultimately lead to financial losses.

Other approaches related to Goods received note

One other approach related to Goods received note is to use it as a tool to track inventory. This can be done in several ways, such as:

• Keeping track of the quantity and type of items received - This can be achieved by comparing the quantity and type of goods received with the purchase order and noting any discrepancies. Any discrepancies should be investigated and reported.
• Tracking the condition of products - A GRN should include information about the condition of the received products. This can be used to determine whether the items are fit for use or require rework or repair.
• Reconciling vendor invoices - The GRN should be used to compare the vendor invoice with the purchase order. Any discrepancies should be noted and investigated.
• Reconciling inventory records - The GRN should be used to verify that the inventory records are correct and up to date.

In summary, a Goods Received Note can be used as a tool to track inventory in several ways, such as tracking the quantity and type of items received, the condition of products, reconciling vendor invoices, and reconciling inventory records.

References

• Dutta M. (2004), Cost Accounting: Principles And Practice, Pearson Education India, India
• Gunnigan L., Orr T.L.L. and Hore A.V., (2004), Rationalising the Construction Materials Purchasing Process in Salford Centre for Research and Innovation (SCRI) Research Symposium and International Built and Human Research Week, Salford University, Great Britain
• Olkiewicz, M. (2018), Technology foresight: an instrument for identifying organisational improvement in Zarządzanie Przedsiębiorstwem Vol. 21 nr 1, Polskie Towarzystwo Zarządzania Produkcją, Poland
• Revelation Accounting Software (2014), Daily Operations – Goods Receiving (GRN) in Revelation Training Manual, Revelation Accounting Software