What it means
A goods received note, or GRN, records what actually arrived from a supplier. It is the receiving team's evidence, not merely a copy of what the supplier says it shipped, and some systems call the equivalent record a receiving report or receipt.
The note should identify the purchase order, supplier, delivery date, items, units, quantities, any visible damage or missing goods, who checked the delivery and where the goods went. The process starts before the invoice is approved, when a buyer issues a purchase order describing authorised items and prices.
Warehouse staff compare the physical delivery with that order and create a GRN for the quantity received. Accounts payable then matches the order, receipt and supplier invoice, and Sage describes this three-way match as a control against paying for goods not received or at the wrong amount.
Suppose the order was for 100 boxes but only 95 arrived: the GRN shows 95, even if the packing list and invoice both say 100, and five boxes remain outstanding pending investigation. Finance should identify whether the supplier will send the rest, issue a credit or correct the invoice, and should not enter 100 merely to make the system pass a match.
If the supplier later delivers the missing five, record that receipt separately and link it to the same order. Condition matters as much as count.
If boxes are damaged, note the visible damage and preserve photos or carrier paperwork if available, and depending on the agreement staff may reject the goods, accept with a claim or quarantine them for inspection. A signature on the delivery paperwork may have contractual implications, so train receiving staff to document discrepancies promptly; the GRN supports the commercial discussion but does not by itself decide who is liable.
The note helps inventory as well as payments, because in some accounting systems recording a receipt increases inventory or an expense account and recognises goods received but not yet invoiced. Sage's GRN guidance describes that type of posting and tracking of partial receipts.
Actual entries depend on the system and accounting policy, and the stock record should show goods available for sale only when the acceptance rules are met, with a later supplier invoice clearing the relevant accrual without double counting. An exception-rate calculation can monitor process quality: if 45 of 900 supplier invoices fail the agreed purchase-order and receipt checks, the rate is 5%.
The count needs a consistent definition and period, and a high number may reflect poor data entry, supplier errors or frequent price changes. A low rate is not a guarantee that fraud is absent, so review the reasons and amounts, not just the percentage.
In practice
Real-world examples.
Example
A warehouse receives 95 of 100 ordered boxes and records 95 on the GRN, leaving five open. The supplier's packing list says 100, but the receiver records only what was counted. Purchasing is told about the five outstanding boxes the same day.
Example
Finance investigates an invoice for 100 units when the GRN supports only 95 rather than paying the unmatched balance. The payable is held for the five units, and the buyer asks the supplier whether they are on the way. The undisputed amount is paid under the agreed terms.
Example
Receiving staff document damaged goods, keep photos and notify the buyer before the supplier bill is approved. The GRN notes the damaged quantity and the carrier paperwork is attached. The buyer then decides whether to reject, accept with a claim or quarantine the goods.
Formula
Calculation
Matching exception rate = supplier invoices with an unresolved agreed PO/GRN match exception / supplier invoices checked x 100. If 45 of 900 fail the checks, the illustrative rate is 45 / 900 x 100 = 5%.
A single match works the same way in dollars. Suppose the purchase order is for 100 boxes at $20 each, so the invoice is 100 x $20 = $2,000, but the GRN records 95 boxes. The goods received are worth 95 x $20 = $1,900, so $100 of the invoice is unmatched and should be held until the supplier corrects the bill, sends the five boxes or issues a credit.Case study
Seen in the real world.
This illustrative and entirely fictional example follows Harbour Hardware, an invented retailer that paid an invoice for 100 tools although only 95 arrived. It introduced GRNs with a check of delivered quantities and visible damage. When another supplier sent a partial order, the warehouse recorded the exact receipt and finance held the unmatched invoice balance until the supplier corrected it.
The team reconciled open receipts weekly, and each receipt was linked to its purchase order so that discrepancies went to a buyer for follow-up. The company also kept the photographs and carrier paperwork with the receipt so that a claim could be raised promptly. The case demonstrates the control; it is not a verified claim that the company recovered a particular sum, and no real recovery amount is claimed.
Watch out
Common mistakes.
- Signing for a shipment without recording shortages or visible damage.
- Entering receipts late or changing the quantity only to force an invoice match.
- Paying a supplier invoice without resolving a material PO and GRN discrepancy.
Questions
People also ask.
What is a GRN?
The receiving business record of items and quantities actually delivered by a supplier.
How is it used?
It supports inventory and helps compare the purchase order, delivery and invoice before payment.
What if goods are damaged?
Record the damage, preserve evidence and follow the purchase terms for rejection, replacement or credit.
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