Goods Receipt Note (GRN)

In one sentence: A goods receipt note (GRN) is the document that confirms ordered goods or services were physically received, forming the third leg of 3-way matching alongside the purchase order and vendor invoice.

What Is a Goods Receipt Note?

A goods receipt note is created when a warehouse team, project manager, or receiving department confirms that items from a purchase order have been delivered. The GRN records what was received: quantities, condition, date, and any discrepancies from the original order.

In an AP workflow, the GRN serves as proof of delivery. Without it, there is no verification that the company actually received what the vendor is billing for.

Why It Matters

The GRN is the most frequently missing document in 3-way matching, and its absence is one of the top reasons invoices get stuck in exception queues:

• Payments blocked: Without a GRN, the system cannot confirm delivery, so invoices cannot be matched and approved.
• Vendor frustration: Suppliers delivered the goods but aren't getting paid because the receiving team hasn't logged the GRN.
• Accrual distortion: Goods are physically on-site but not recorded in the system, creating a gap between physical inventory and financial records.
• Audit exposure: Paying invoices without confirming receipt weakens internal controls.

How It Works

1. Purchase order issued: Procurement creates a PO and sends it to the vendor.
2. Goods delivered: The vendor ships the items. The receiving team inspects the delivery.
3. GRN created: The receiving team logs what was actually received: quantities, condition, and any shortages or damages.
4. GRN matched to PO: The system compares what was ordered (PO) against what was received (GRN).
5. Invoice matched: When the vendor invoice arrives, it is compared against both the PO and GRN to complete the 3-way match.

Common Problems

• Delayed recording. Warehouse teams receive goods but don't log GRNs for days or weeks, blocking invoice processing even when delivery happened on time.
• Partial deliveries. A single PO may have multiple shipments. Each partial delivery needs its own GRN, creating complexity in matching.
• Service-based POs. For consulting, maintenance, or software services, there's no physical "receipt." Teams struggle with how to confirm delivery of intangible work.
• No mobile capture. If the receiving team must log GRNs from a desktop ERP, delays are inevitable when goods arrive at a warehouse or job site.

FAQ

What happens if a GRN is missing?

The invoice enters the exception queue because 3-way matching cannot be completed. The AP team must contact the receiving department to confirm whether goods were delivered and request that the GRN be recorded before the invoice can proceed.

How quickly should GRNs be recorded?

Best practice is within 24 hours of delivery. Companies that enforce same-day or next-day GRN recording significantly reduce matching exceptions and payment delays.

Can GRN creation be automated?

Partially. Some ERP systems auto-generate GRNs when shipping notifications are received from vendors. For physical deliveries, mobile scanning solutions allow warehouse staff to confirm receipt in real time, which auto-populates the GRN in the system.