Demystifying Goods Received Note (GRN): A Comprehensive Guide

GRN Receipt

Organisation is the pillar of effective inventory management in any organisation. For larger organisations, the risk of error is high without a systematic process for every transaction. That is where a GRN plays a role. A GRN, in its full form, is a Goods Received Note, which is document-proof for goods sent by suppliers as mentioned in the purchase order.

The GRN (Goods Received Note) contains product details such as type, cost, quantity, and quality checks. While it serves as an acknowledgement between suppliers and receivers, it is a future reference in case of conflicts and dispute resolution. Let’s learn about the GRN herein.

What is the GRN Receipt

A GRN receipt is a crucial document that confirms the receipt of goods between suppliers and vendors. GRN stands for Goods Received Note. It is an important record for inventory management. Vendors issue GRN receipts to suppliers after the reception of goods, confirming the quantity, nature, and condition of the goods. 

If the goods are damaged, receivers can inform the suppliers at this stage. In that case, a GRN receipt will be issued after verification and adjustments.

The GRN document applies only to tangible goods, not to intangible services. As simple as it may sound, it involves multiple stakeholders, inter-departmental approvals, deadlines, and other intense manual tasks. 

Structure of GRN Format

Header: Includes details of company name, a unique GRN number, and the date of receipt.

Supplier Info: Name, address and contact details of the supplier.

Delivery Details: The date and time of delivery, the mode of transportation, and any special instructions followed for delivery.

List of items: A detailed list of all items along with product descriptions, quantity, unit price, item codes, and total value of the products.

Quality Checking Section: Some GRN formats include information about the condition of the goods received, good or damaged.

Signatory: Signatures of authorised personnel from both suppliers and receivers to acknowledge and verify GRN details.

GRN Format - Goods Received Note


GRN Issuance Process

  1. The receiving department or warehouse receives the goods from the supplier or vendor.
  2. They inspect the received goods and check them against the purchase order or shipping documents. It is to ensure they are accurate in quantity, product specs, and condition.
  3. Any discrepancies, such as shortages, damaged goods, or incorrect items, are recorded for further action.
  4. A GRN is prepared manually or by a software system. It contains details. For example, the order number, supplier name, item descriptions, and received quantities. It also includes the date of receipt and any noted discrepancies.
  5. Authorised personnel review and approve the GRN. They are usually from the receiving department or inventory team.
  6. Receivers give copies of the approved GRN to relevant departments. These include purchasing, accounts payable, and the supplier.
  7. The inventory records reflect the received goods and their quantities by updating them based on the information in the GRN.
  8. The GRN serves as a reference document for reconciling the supplier’s invoice.

Benefits of GRN Receipt

Delivery Acknowledgement: GRN primarily acknowledges the successful receipt of goods by vendors. It closes the transaction.

Future Reference: A GRN is a crucial document for future reference for both vendors and suppliers. It serves as proof for any dispute resolution, warranty and returns claims in future.

Quality Check: Vendors will perform quality checks on the goods received and inform the suppliers if there are any issues. 

Inventory Management: GRN enables businesses to monitor stock levels and effectively plan restocking. Additionally, inventory managers can cross-check received products against ordered items, preventing unauthorised goods from entering the inventory.

Accounting: The GRN document enables accountants to validate inventory balances and verify purchase entries in the stock ledger without having to request procurement details from the warehouse or managers.  

Cost Tracking: By recording the quantity and value of goods received, GRNs assist in tracking the cost of inventory, which is useful for accounting and financial reporting purposes.

Legal Compliance: In certain industries or jurisdictions, issuing GRNs may be a legal or regulatory requirement. So, they ensure compliance with accounting standards, tax laws, or other regulations.

On-time Payments: GRNs facilitate the timely processing of vendor payments by providing a record of goods received. Once the goods have been verified and accepted, vendors can authorise payment.

Supplier Performance Evaluation: GRNs are a record of vendor performance, including delivery times, quality of goods received, and any discrepancies. They can be used to evaluate and manage supplier-vendor relationships.

Who Prepares Goods Received Note

The Goods Received Note (GRN) is typically prepared by the receiving department or the stores department of a company when they receive goods or materials from a supplier or vendor. It is an internal document that serves as proof of receipt and acts as a cross-reference for the subsequent processing of the supplier’s invoice. 

Challenges with GRN Receipts

  • Delayed GRN issuance due to time taken for quality checks, especially in larger organisations where turnaround time can take a week.
  • Lack of communication regarding quality issues leads to bottlenecks in issuing GRNs in larger organisations.
  • Potential discrepancies and errors among the ordering, procurement, and supplier teams halt the GRN and invoice generation process.
  • The manual and tedious process of managing GRNs, including issue resolution and communication across teams, results in a high administrative workload.
  • GRN systems do not integrate with other software like inventory management, accounting, or ERP systems. Tedious manual data entry increases the risk of errors.
  • Companies with a high volume of transactions need help to store and retrieve GRN receipts. This is true for companies that maintain records for extended periods.

Methods of Automating GRN Process

The automation of the entire GRN issuance process needs to be improved. However, with the help of available technologies, it is possible to expedite many intermediate processes. It ultimately speeds the GRN issuance while reducing the risk of manual errors.

Barcode Scanners: Using barcode scanners or radio-frequency identification (RFID) technology to automate verifying and recording the received goods against the purchase order.

Optical character recognition (OCR): OCR technology can automate the extraction of data from shipping documents or invoices, reducing manual data entry and errors.  

Electronic data interchange (EDI): Establishing an EDI system with suppliers can enable the automatic exchange of purchase orders, shipping notifications, and GRN information.

Cloud-Solutions: Adopting cloud-based GRN solutions can provide centralised access, real-time updates, and improved collaboration among stakeholders, regardless of their location.

Streamlining Workflow: Implementing workflow automation tools can streamline the review, approval, and distribution processes for GRNs, reducing delays and ensuring timely communication among departments.


In essence, GRNs serve as crucial documentation for receiving goods, acknowledging delivery, and facilitating inventory management and accounting processes. However, we learn that issuing GRNs can be challenging, especially for larger organisations. It results in delayed responses, communication gaps, recording errors, and a need for more automation or integration with other systems. 

Addressing these challenges through standardised procedures, training, automation and technology adoption can streamline the GRN process. 

Related read: Purchase Order Fulfillment Strategies for Blinkit

FAQs About Goods Received Note

What is GRN full form in SAP?

In SAP, the full form of GRN is a Goods Receipt Note. It is a document that records the receipt of goods from vendors or suppliers.

What is GRN in accounting?

GRN accounting refers to the Goods Received Note.

What is the GRN example?

A Goods Received Note (GRN) is a document that confirms the receipt of goods from a supplier. It records the items delivered, allowing the buyer to verify if the received goods match the order.

What is the difference between GRN and Purchase order (PO)?

A Purchase Order (PO) is a document issued by the buyer specifying the products, quantities, and prices for the seller to provide. A Goods Received Note (GRN) confirms the receipt of goods and is typically compared against the PO before payment is made to the seller.