A Goods Receipt Note (GRN), sometimes called a Goods Received Note, is the formal document created by the buyer to confirm that goods ordered through a Purchase Order (PO) have been received in the correct quantity, specification, and condition.
It is a foundational control point in the Procure-to-Pay (P2P) cycle, linking procurement intent (PO), physical fulfillment (delivery), and financial settlement (invoice matching and payment).
A GRN acts as the official proof of delivery, enabling inventory updates, supplier performance tracking, and 3-way invoice matching. It is one of the most important internal controls that prevents overbilling, duplicate payments, and supply discrepancies.
Read more: Guide to Goods Received Note (GRN) in Procurement: A Key to Efficient Supply Chain Operations
Why GRNs Matter in Procurement
A strong GRN process ensures:
- Inventory Accuracy: Stock is updated only when verified and accepted.
- Invoice Validation: Enables 2-way or 3-way matching before AP posts payments.
- Supplier Accountability: Tracks under-deliveries, damages, and non-compliance.
- Audit & Compliance: Maintains a traceable record for financial audits.
- Dispute Resolution: Serves as evidence when discrepancies arise with suppliers.
In short, A GRN protects the organization by validating that what was ordered, what was delivered, and what is being invoiced are fully aligned.
The Complete GRN Lifecycle
1. Delivery Logging and Receipt Initiation
The lifecycle begins when goods arrive at the warehouse or delivery point. Receiving teams verify the shipment against expected Purchase Orders by checking delivery documents such as packing slips or ASNs. This establishes that the delivery is legitimate and aligns with what procurement planned.
2. Quantity and Quality Verification
Once logged, goods undergo physical inspection. Teams confirm the delivered quantity, validate specifications, check batch or serial numbers, and assess the condition of the items. Any shortages, over-deliveries, damages, or incorrect items are identified at this stage, ensuring only compliant goods move forward.
3. GRN Creation and Documentation
After verification, the formal Goods Receipt Note (GRN) is created. It captures the PO number, items delivered, quantities accepted and rejected, timestamps, and remarks on discrepancies. In digital P2P systems, this step is automated, with the GRN generated as soon as the receiver confirms acceptance on the system.
4. Discrepancy Handling and Supplier Coordination
If issues arise, the GRN becomes the basis for controlled dispute resolution. Procurement teams work with suppliers to arrange replacements, authorize returns, issue debit notes, or initiate corrective actions. The documented GRN ensures transparency and clarity during these interactions.
5. Inventory and System Updates
Once approved, the GRN updates inventory and ERP records in real time. Stock levels adjust, triggering downstream activities such as put-away, quality-hold routing, or production staging. Accurate GRN posting prevents stock mismatches and supports reliable planning.
6. Three-Way Matching and Invoice Validation
The final stage uses the GRN as the key control in invoice processing. AP teams perform two-way or three-way matching to confirm that the supplier’s invoice aligns with the PO and the GRN. Only invoices backed by confirmed receipt of goods move forward, preventing overbilling, duplicates, or fraudulent claims.
7. Performance Feedback Loop
GRN data feeds into supplier performance analysis, highlighting delivery timeliness, accuracy, and defect patterns. This insight informs QBRs, sourcing evaluations, and future contract negotiations.
The Components of a GRN (Goods Receipt Note)
Every GRN contains a standard set of elements that establish it as the formal and auditable record of goods received. These components ensure procurement, warehouse teams, finance, and suppliers all operate from a consistent and verified source of truth.
1. Purchase Order Reference
The GRN always begins by linking back to the corresponding PO. This connection ensures that the goods received match the original procurement intent and contracted terms.
2. Supplier and Delivery Information
The document records the supplier’s name, delivery note or packing slip details, shipment IDs, and the date and time of arrival. These details form the logistical baseline for receipt verification.
3. Item Description and Specifications
Each item delivered is listed with its product code, description, model, size, or other specifications. This ensures the receiver can validate that the correct items — not substitutes or variants — were delivered.
4. Quantities Delivered, Accepted, and Rejected
A critical component of the GRN is the clear breakdown of how much was delivered versus how much was accepted. Shortages, surplus quantities, or rejected items are all captured here for transparency and future dispute resolution.
5. Condition and Quality Assessment Notes
Any observations made during physical inspection — such as damage, defects, packaging issues, or non-compliance with specifications — are documented. This establishes factual grounds for returns or supplier claims.
6. Batch, Lot, or Serial Numbers
For industries requiring traceability (manufacturing, healthcare, food, electronics), the GRN includes batch numbers, expiry dates, or serial IDs to support tracking and controlled usage.
7. Receiver Details and Acknowledgment
The GRN is completed with the name, ID, or digital signature of the receiving personnel. This provides accountability and marks the official acceptance of goods into the organization.
8. Comments, Exceptions, and Supporting Attachments
Any additional remarks, discrepancy notes, photos of damaged goods, or supplementary documents are appended to the GRN. These items strengthen the evidentiary record used for audits and supplier negotiations.
KPIs Linked to GRN Processes
| KPI | Meaning |
| GRN Cycle Time | Time from delivery to GRN creation |
| Delivery Accuracy % | Correct quantity delivered vs ordered |
| Damage/Defect Rate | Goods rejected due to quality issues |
| Supplier Fill Rate | Percentage of order fulfilled completely |
| GRN Exception Rate | % of GRNs with discrepancies |
| AP Match Success Rate | Invoices cleared on first pass due to accurate GRN data |
Key Terms in GRN Processes
- ASN (Advance Shipment Notice): Supplier’s notification before delivery.
- 3-Way Match: Invoice, PO, and GRN validation.
- RGP/NRGP: Returnable/Non-returnable gate passes for returns.
- Short Receipt: Partial acceptance of goods.
- Quality Hold: Items flagged pending inspection approval.
FAQs
Q1. What is GRN in procurement?
A GRN (Goods Receipt Note) is the official document that confirms goods have been received in the correct quantity and condition. It links the Purchase Order to the physical delivery and acts as the key control for inventory updates and invoice approval.
Q2. What is the difference between a GRN and a purchase order?
A Purchase Order (PO) represents the intent to buy, while a GRN confirms the receipt of goods. The PO initiates the commitment; the GRN validates fulfillment and enables 3-way matching in the P2P process.
Q3. Why is a GRN important in the P2P cycle?
It prevents overbilling, enables accurate 3-way matching (PO–GRN–Invoice), updates inventory, and provides audit-ready proof that goods were actually received before payment is released.
Q4. Who creates the GRN in an organization?
Typically, warehouse teams, receiving departments, or site supervisors create the GRN after inspecting and accepting the delivered goods. In digital P2P platforms, this is done through handheld devices or receiving screens.
Q5. What happens if the GRN doesn’t match the invoice?
The invoice is flagged as an exception and routed for investigation. Procurement and AP teams work with the supplier to resolve discrepancies such as shortages, damages, incorrect items, or pricing deviations before payment is approved.
References
For further insights into these processes, explore Zycus’ dedicated resources related to Goods Received Note (GRN):
- Some Insights on Global Automated Spend Analysis Solutions Market from the Report by TechNavio
- RPA, Intelligent Automation and Agentic AI: Navigating the Automation Revolution
- Profitability in Procurement? Allow Data the Driver’s seat!
- 5 Strategies to Overcome Procurement Challenges in The COVID-19 Era
- Maximize ROI with Effective Contract Management Strategies
