Goods Received Note (GRN)

Goods Received Note (GRN) is a formal document created when ordered goods are physically received and inspected at the delivery point, confirming the quantity, condition, and specification of items against the purchase order. It records what actually arrived, which is the receipt leg of a three-way match and the point at which a liability is recognised.

Category: Purchase Order SoftwareBest Purchase Order Software

When a delivery arrives at the warehouse dock, the business needs a formal record that what showed up is what was ordered, in the right quantity and condition. A Goods Received Note (GRN) is an internal document that confirms the physical receipt of goods against a purchase order. It triggers three-way matching in AP automation and drives the accounting entry that moves inventory from in-transit to received, which makes it a control document for both operations and finance.

How a GRN triggers matching and unlocks invoice payment

Once a goods receiver completes a GRN (recording quantities accepted, quantities rejected, and any damage noted), the document is posted in the ERP and matched against the open purchase order line items. When the AP team later receives a supplier invoice, the three-way match engine compares invoice line items to the PO (for price) and the GRN (for quantity received). Only when all three documents agree within defined tolerances does the invoice route for payment approval. If the GRN quantity is less than the invoiced quantity, the invoice is held and a discrepancy notice goes to the supplier.

Where it gets complicated

A delivery note is a supplier-issued document that accompanies a shipment, listing what the supplier claims to have sent. A GRN is an internally generated document that records what the company has confirmed receiving. The distinction is critical for AP control: the delivery note is the supplier's assertion; the GRN is the organisation's verification. Using a supplier's delivery note as a substitute for an internal GRN removes an independent check and creates a risk that quantity discrepancies go undetected until physical inventory count, by which point the invoice has already been paid.

A partial receipt scenario and its accounting treatment

A retailer orders 500 units of a product at $20 each, a $10,000 PO. The first shipment delivers 300 units, and the warehouse team raises a GRN for 300 units. The ERP posts a debit to inventory of $6,000 and a credit to goods received not invoiced (GRNI) of $6,000. The remaining 200 units stay on backorder. When the supplier sends an invoice for all 500 units, the three-way match fails on quantity: the AP system holds the invoice and requests a credit note for the 200 undelivered units before releasing payment for the 300 confirmed by the GRN.

Questions to ask before implementing a GRN process

Who is authorized to create and post a GRN: only trained goods receivers, or any warehouse employee?
Does the GRN capture line-item quantities and condition, or just a single 'received' confirmation against the whole PO?
How quickly after physical receipt must a GRN be posted to ensure the GRNI accrual is accurate at period end?
How does the system handle partial receipts? Does it leave the PO open for the remaining balance automatically?
What is the tolerance rule for three-way matching? Must price and quantity match exactly, or is a percentage variance acceptable before the invoice is held?
How are rejected or damaged goods recorded on the GRN, and does that trigger an automatic supplier return authorisation?
What happens to the GRNI balance for goods received against a PO where no invoice has arrived within 30 or 60 days?

Where teams get GRN discipline wrong

The most common failure is backdating GRNs: posting a receipt after the invoice has already arrived to force a match and release payment. This defeats the control entirely and creates cutoff errors on the balance sheet. Finance teams also often ignore the GRNI account until it grows into a material reconciling item at year end. A clean GRN process requires a monthly GRNI review: long-outstanding items mean either an uninvoiced receipt that needs an accrual or a GRN posted in error that needs to be reversed.

Receipt note against delivery note

The delivery note comes from the supplier and states what they say they sent. The goods received note is raised by the receiving party and states what was actually accepted after checking quantity and condition. The difference between the two is the discrepancy record. In a matched process the receipt note is created before the invoice is approved, not after.

Comparing PO tools

PO tools are judged downstream: a requisition flow only pays for itself if it reduces the invoice exceptions that land in accounts payable. Once Goods Received Note (GRN) is settled as a requirement, read the Purchase Order Software category guide for how the market splits, then weigh the Airbase profile against the Tipalti profile on that requirement rather than on the feature list. Our Airbase pricing breakdown records what the vendor publishes and what is quote-based. The Airbase against BILL comparison sets two of them side by side on the same criteria. Before you book demos, put your own numbers through the purchase order savings calculator so the business case is written down before a vendor writes it for you.

Goods Received Note (GRN) questions

What is the GRNI account and why does it matter?

GRNI (Goods Received Not Invoiced) is an accrued liability account. When a GRN is posted, inventory is debited and GRNI is credited, representing an obligation to the supplier before their invoice arrives. The GRNI balance should match outstanding GRNs awaiting invoices. An unexplained balance points to missing invoices or GRN posting errors.

Can a GRN be created for services as well as physical goods?

Yes. Many ERP systems support a service receipt confirmation, sometimes called a service entry sheet, that works like a GRN for intangible deliverables. A project manager confirms that agreed deliverables have been met, which releases the PO line for invoice matching in AP and applies the same three-way control to service spend.

What happens if a GRN is posted for the wrong quantity?

The GRN should be reversed and reposted with the correct quantity. If an invoice has already been matched to the incorrect GRN and paid, a credit note from the supplier and a correcting journal entry are required. This is why GRN accuracy at the point of receipt is far less costly than correcting errors after payment has been released.

Blanket Purchase Order and Purchase Requisition come up in the same workflow as Goods Received Note (GRN), and the rest of the PO tools cluster is indexed in the finance operations glossary.