What Is a Goods Received Note? Complete GRN Guide

A goods received note is a document the buyer creates at the point of delivery, recording exactly what arrived: quantities, item descriptions, conditions, and any discrepancies. This record is then matched against the original purchase order and the supplier's invoice through three-way matching, and payment is not authorized until all three documents align.

The GRN meaning is often misunderstood as a simple receipt or delivery confirmation. It is neither. A goods received note is the buyer's independent account of what was actually received, not the supplier's claim of what was shipped. That distinction matters. The supplier's delivery note reflects their perspective and their data. The GRN reflects yours. It is created by your receiving staff, based on your physical inspection, and it serves your financial controls. This buyer-side perspective is the organizing principle of everything that follows.

This guide covers the complete GRN lifecycle: what a goods received note contains at the field level, how it differs from a delivery note, its role as the third leg of three-way matching and invoice verification, a step-by-step process for creating one correctly, and what goes wrong when GRN data is inaccurate.

What a Goods Received Note Contains

A goods received note captures a specific set of data at the moment inventory arrives. Each field serves a purpose beyond simple record-keeping: it feeds directly into purchase order reconciliation, invoice verification, and dispute resolution. While GRN formats vary across organizations (paper forms, ERP-generated documents, warehouse management systems), the core fields remain consistent.

Here is what a standard goods received note template includes and why each field matters:

GRN number -- A unique identifier assigned to each receipt event. This is the reference number that AP, procurement, and warehouse teams use to track and retrieve the record. Without a standardized numbering system, matching receipts to invoices becomes a manual search exercise.
Date of receipt -- The exact date goods were physically received at the delivery point. This timestamp matters for payment term calculations, warranty start dates, and resolving disputes over late deliveries.
Supplier name and details -- Identifies which vendor shipped the goods. Critical when multiple suppliers fulfill similar items, and essential for routing any quality or quantity discrepancies back to the correct party.
Purchase order number -- The PO this delivery fulfills. This single field connects the goods receipt note to the original order, making it the primary link used during three-way matching. Without it, AP staff must manually hunt for the corresponding PO before they can verify an invoice.
Delivery note reference number -- The supplier's own document reference for the shipment. Cross-referencing this with the supplier's delivery note confirms both parties are discussing the same consignment when questions arise.
Item descriptions -- Line-by-line descriptions of what was received, matching the PO line items. Accurate descriptions prevent misidentification, particularly when similar products arrive from the same supplier in a single shipment.
Quantities ordered versus quantities received -- The quantity-received field is the value compared against both the PO quantity and the invoiced quantity during three-way matching. Recording both figures on the GRN makes shortages and overages immediately visible at the point of receipt rather than weeks later when the invoice arrives.
Condition and quality notes -- Any damage, defects, or discrepancies observed during inspection. These notes create a contemporaneous record of problems documented at the time of receipt, before they become invoice disputes. A note written on the loading dock carries far more weight than a complaint raised after the supplier's invoice has already been processed.
Receiver name or signature -- Identifies who accepted the delivery and confirmed the GRN details. This provides accountability and an audit trail. If a discrepancy surfaces later, there is a named individual who can speak to the condition of goods at arrival.
Inspection or quality check results -- Formal pass/fail outcomes or grading results from any quality control procedures performed during or immediately after receipt. Organizations in regulated industries often require documented inspection results before goods can be moved into usable inventory.

Organizations adapt this standard template by adding industry-specific fields where needed. Pharmaceutical companies might add batch numbers and expiry dates. Food distributors often include temperature logs recorded at the point of receipt. Manufacturers may require certificate of conformance references tied to each line item.

Within the procure-to-pay cycle, the goods receipt note sits between the physical act of receiving goods and the financial act of verifying the supplier's invoice. It is the bridge that translates what happened on the loading dock into structured data that AP departments can compare against purchase orders and invoices. Without that bridge, financial processing relies on assumptions rather than verified receipt data.

One of the most common points of confusion around GRNs is the difference between a goods received note and a delivery note.

GRN vs Delivery Note: The Key Difference

The distinction comes down to who creates the document and when. A delivery note is created by the supplier and travels with the goods during shipment. A goods received note is created by the buyer after inspecting the goods at the receiving dock. Each document serves a different party and records a different perspective on the same shipment.

This matters because the two documents can tell different stories. The delivery note records what the supplier says they shipped. The GRN records what the buyer actually received and its condition. When a shipment arrives with damaged items, missing units, or incorrect products, the delivery note and GRN will disagree. That disagreement is the entire point of maintaining a separate goods received note. Without it, the buyer has no independent record of what showed up at their facility.

A related document is the packing slip, which is similar to a delivery note but focuses on the physical contents of each package rather than the commercial details of the order. In practice, the terms are sometimes used interchangeably, but a packing slip typically lists items and quantities per box or pallet, while a delivery note includes order references and shipping terms.

To see where each of these documents fits in the procurement cycle, the table below maps out the full chain from order to payment:

Document	Created By	Purpose	Key Data
Purchase Order	Buyer	Authorize a purchase and set terms	Items, quantities, agreed prices, delivery date
Delivery Note	Supplier	Confirm what was shipped	Items, quantities shipped, shipment date, carrier
Goods Received Note	Buyer	Confirm what was received and its condition	Items, quantities received, condition, discrepancies
Invoice	Supplier	Request payment for goods delivered	Line items, amounts due, payment terms, PO reference

Understanding the difference between purchase orders and invoices provides additional context for how these documents interact at opposite ends of the procurement cycle. The purchase order initiates the transaction; the invoice closes it. The delivery note and GRN sit in the middle, bridging the gap between what was promised and what was paid for.

The GRN's full significance becomes clear when it enters the three-way matching process, where the purchase order, GRN, and invoice are compared line by line before any payment is approved.

How the GRN Feeds Into Three-Way Matching

Three-way matching is the process of comparing three documents (the purchase order, the goods received note, and the supplier invoice) before authorizing payment. Of these three, the GRN is often the most critical. It provides the buyer's independent confirmation of what was physically received, turning a he-said-she-said between order and invoice into a verifiable, auditable process.

Field-Level Mapping Across All Three Documents

The real value of a GRN in procurement becomes clear when you map specific data fields across all three documents. Each field on the GRN has a direct counterpart on the PO and the invoice, and discrepancies at any point signal a problem worth investigating before payment is released.

Field	Purchase Order	GRN	Invoice
Item description	What was ordered	What was received	What the supplier is billing for
Quantity	Quantity ordered	Quantity received	Quantity invoiced
Unit price	Agreed price per unit	Verified against PO at receipt	Invoiced price per unit
Total amount	PO line total	Derived: qty received x unit price	Invoice line total

This field-level mapping is what makes GRN in accounting so central to payment controls. Every row in the table represents a checkpoint where errors, fraud, or honest mistakes can be caught before money leaves the organization.

The Three Comparison Points

Three-way matching works through three distinct comparisons, each serving a different purpose:

PO vs. GRN confirms that the right goods arrived in the right quantities. If the PO says 500 units and the GRN says 430 units were received, that 70-unit shortfall needs to be resolved before anyone processes an invoice for 500.

GRN vs. Invoice confirms the supplier is billing only for what was actually delivered. This is the comparison that catches overbilling, whether intentional or accidental. If the GRN records 430 units received but the invoice charges for 500, the discrepancy is immediately visible.

PO vs. Invoice confirms that prices match the agreed terms. If the PO locked in a unit price of $12.00 but the invoice lists $13.50, that variance gets flagged during invoice verification rather than discovered months later during an audit.

Why the GRN Closes the Evidence Gap

Without a GRN, the buyer has only two sources of information: their own purchase order (what they asked for) and the supplier's invoice (what the supplier claims to have delivered). There is no independent confirmation that physical receipt actually matched either document. The GRN fills that gap. It is the buyer's own record of what showed up at the dock, inspected and counted by their own staff, documented at the time of receipt.

This is why accounts payable teams that skip GRN creation or treat it as optional paperwork run into persistent matching failures. The invoice arrives, the PO exists, but there is nothing in between to verify the supplier's claims against reality.

For a thorough walkthrough of how three-way matching works in accounts payable, including tolerance thresholds and exception handling, refer to the matching guide.

With the matching role of the GRN established, the next section covers how to create a goods received note correctly so that matching succeeds on the first pass.

How to Create a Goods Received Note

A reliable GRN process follows the same sequence every time, regardless of whether your team works with paper forms or an ERP system. Each step builds on the previous one, and skipping any of them introduces the kind of errors that stall invoice payments downstream.

Step-by-Step GRN Process

1. Retrieve the purchase order and delivery note. Before the shipment is even opened, pull the corresponding PO and the supplier's delivery note. Having both documents in hand before inspection begins gives the receiver a clear reference for what was ordered, what the supplier claims to have shipped, and what quantities to expect.

2. Physically inspect and count all items. Check every line item against both the delivery note and the PO. Count units individually rather than accepting pallet or carton counts at face value. For items sold by weight or volume, verify measurements with calibrated equipment.

3. Record any discrepancies. Document every variance you find: short shipments, damaged goods, wrong items, unexpected extras, or quality issues. Be specific. "3 units damaged" is less useful than "3 units of SKU-4820 with crushed outer packaging and visible denting on the product casing." Photograph damage where possible.

4. Complete all GRN fields. Fill in every required field on the GRN form:

GRN number (unique sequential identifier)
Date of receipt
Supplier name and details
PO number
Delivery note reference
Item descriptions
Quantities ordered vs. quantities received
Condition notes (including any discrepancies from Step 3)
Receiver name

Leaving fields blank creates ambiguity that surfaces weeks later when AP tries to reconcile the invoice.

5. Sign or authorize the GRN. The person who physically inspected the goods signs the document. This signature confirms that the recorded quantities and condition notes reflect what actually arrived, not what was expected to arrive. In regulated industries, a second signature from a quality inspector may be required.

6. Distribute copies to all relevant departments. Route the completed GRN to:

Accounts payable for three-way matching against the invoice and PO
Procurement for PO closure tracking and supplier performance records
Warehouse/inventory for stock level updates
The supplier if discrepancies require a credit note, replacement shipment, or formal dispute

GRN Creation Checklist

Use this checklist at the point of receipt. Print it or incorporate it into your receiving SOP.

Verify the PO number matches the delivery
Count each line item individually
Check item descriptions against the PO
Inspect all items for visible damage
Note any temperature or storage concerns if applicable
Record batch or serial numbers if required
Document discrepancies with written detail and photographs if possible
Obtain the receiver's signature
File the completed GRN within 24 hours of receipt

Electronic GRN Creation in ERP Systems

Many organizations generate GRNs electronically through their ERP platform rather than on paper. SAP handles goods receipt through the MIGO transaction (Movement Type 101), where the system pulls item details, quantities, and pricing directly from the PO. Oracle uses its Receiving Transaction module to accomplish the same workflow. Both systems auto-populate fields from the purchase order and enforce data completeness before allowing the receipt to be saved, which cuts down on the blank-field and transcription errors common with manual forms.

The core GRN process remains identical whether you use paper, a spreadsheet, or a full ERP system. What changes is how much of the data entry the system handles for you and how strictly it enforces completeness before the record is finalized.

Even with a thorough process and proper tooling, GRN errors still happen in practice. The next section walks through what occurs when GRN data is wrong and how a single mistake cascades through the entire payment cycle.

What Happens When GRN Data Is Wrong

A single data entry error on a goods received note can authorize thousands of dollars in incorrect payments before anyone notices. Consider how quickly this happens in practice.

A worked goods received note example: Your company issues a purchase order for 500 units of a component at $12.00 each, totaling $6,000. The supplier ships all 500 units, but 20 arrive with visible damage. The receiving clerk counts all 500 units on the dock and records 500 on the GRN without noting the condition of the damaged items. The supplier invoices for 500 units at $12.00, totaling $6,000.

When Accounts Payable runs three-way matching, the numbers align perfectly:

PO: 500 units at $12.00 = $6,000
GRN: 500 units received
Invoice: 500 units at $12.00 = $6,000

All three documents agree. Payment of $6,000 is authorized automatically. The company has now overpaid by $240 (20 damaged units x $12.00) with no matching exception to flag the problem.

Had the GRN correctly recorded 480 acceptable units and documented 20 units damaged on arrival, the quantity discrepancy between the GRN (480) and the invoice (500) would have triggered a matching exception. That exception would have routed the invoice for investigation before any payment was released, giving the company leverage to negotiate a credit or replacement with the supplier.

This is not an edge case. It is the predictable outcome of treating receiving as a counting exercise rather than a quality verification step.

Common GRN Mistakes and Their Downstream Effects

Incorrect quantities recorded. Whether the error inflates or deflates the count, the result is the same: the matching process either authorizes an incorrect payment or generates a false exception that wastes AP staff time investigating a problem that does not exist. Overpayment errors are particularly damaging because they pass through matching controls silently.

Missing or wrong PO reference. Without a valid purchase order number, the GRN becomes an orphan receiving record. AP cannot match it to any open order, which blocks invoice processing entirely. The invoice sits in a queue while staff manually search for the correct PO, a process that can take days if the receiver did not record enough detail to identify the order.

Delayed GRN creation. Payment stalls. The PO exists, the invoice exists, but the GRN has not been entered yet because the receiving team is a week behind. Three-way matching cannot proceed, and the company risks losing early payment discounts or incurring late fees while waiting for paperwork to catch up with physical goods that arrived days earlier.

No damage or condition notes. If damaged goods are documented after the fact rather than at the point of receipt, the company has no contemporaneous evidence to support a claim against the supplier or carrier. Disputes become a matter of conflicting accounts rather than documented facts, and suppliers are far less likely to issue credits without receiving-dock evidence recorded at the time of delivery.

Incomplete item descriptions. Vague or partial descriptions on the GRN force AP staff into manual investigation. When a GRN line reads "parts - 200 units" rather than specifying the part number, description, and unit of measure from the PO, matching becomes a research project rather than an automated comparison.

The Cascade Effect

One inaccurate GRN does not affect just one invoice. The consequences compound across multiple business functions:

Lost discounts and late fees. Matching exceptions delay payment authorization. A 2/10 net 30 discount lost on a $50,000 invoice costs $1,000 in savings that cannot be recovered.
Supplier relationship damage. Suppliers track payment reliability. Consistently slow or disputed payments lead to tightened credit terms, reduced priority during supply shortages, or outright price increases on future orders.
Audit trail gaps. Auditors rely on the GRN as independent proof that goods were received. Missing or inaccurate GRNs weaken internal controls and can result in audit findings that require costly remediation.
Inventory record errors. If the GRN feeds into inventory management systems, quantity errors propagate into stock levels, reorder triggers, and financial reporting. Correcting these downstream requires reconciliation work that far exceeds the effort of recording the GRN accurately the first time.

For a broader view of how these discrepancies affect invoice processing workflows for manufacturers, the challenges multiply when receiving operations span multiple facilities, shift changes, and high-volume inbound shipments.

The examples above focus on general receiving scenarios. GRN requirements and complexity vary significantly by industry.

GRN Requirements Across Industries

The standard GRN process covers the fundamentals, but each industry layers on additional requirements that reflect its specific risks, volumes, and regulatory pressures. Understanding these variations matters because a GRN workflow designed for one sector will likely fall short in another.

Manufacturing

In manufacturing environments, receiving goods and accepting them are two distinct steps. Raw materials and components typically pass through an incoming quality control (IQC) gate before the GRN is finalized. The GRN may need to record test results, references to certificates of conformance, and material batch numbers that enable full traceability back to the supplier's production run.

Partial receipts add another layer of complexity. Suppliers frequently ship in stages against a single purchase order, generating multiple GRNs that must all reconcile when the invoice arrives. These three-way matching challenges in manufacturing multiply quickly when a single PO produces five or six separate deliveries over several weeks, each with its own quantities, quality results, and potential discrepancies.

Retail

Retail receiving operates at a different scale. A single delivery against a blanket purchase order may contain hundreds of SKUs, making manual counting impractical. Most retail distribution centers rely on barcode or RFID scanning at the receiving dock to capture quantities automatically and compare them against the expected delivery.

Automated discrepancy thresholds are standard practice. Rather than flagging every minor variance, many retail operations accept deviations within a defined range, such as 2%, without generating an exception. This keeps the receiving process moving at the speed the business demands. The tradeoff becomes apparent during seasonal inventory spikes, when higher delivery volumes and tighter timelines increase both error rates and the pressure to process GRNs quickly.

Services

Physical goods are not always part of the equation. In services procurement, the GRN equivalent is a service completion certificate or a signed timesheet confirming that the agreed work was delivered as specified. The matching process follows the same logic but with different documents: a service agreement functions as the purchase order, the completion certificate serves as the GRN, and the invoice closes the loop.

The judgment calls here are qualitative rather than quantitative. A service agreement may specify 40 hours of consulting, and the completion certificate confirms 40 hours were delivered, but the client disputes whether 8 of those hours were productive. Unlike goods receiving, where a count is objective, services acceptance involves subjective judgment about quality and completeness. This makes the documentation on the completion certificate even more critical than a standard GRN, because there are no serial numbers or physical counts to fall back on.

The document name changes across industries, but the function does not: an independent buyer-side confirmation of what was received or completed before authorizing payment.

Strengthening Your GRN Process

Every GRN error that passes undetected at the receiving dock becomes a matching failure, an overpayment, or a supplier dispute downstream. Improving GRN accuracy does not require a complete overhaul of your procure-to-pay cycle. Five targeted steps can produce measurable results:

Standardize GRN fields across all receiving locations. Use a consistent checklist, such as the field breakdown covered earlier in this article, so that every warehouse and dock records the same data points in the same format. Inconsistency between locations is one of the fastest ways to introduce matching errors.
Train receiving staff on the downstream impact of their data. Warehouse teams rarely see what happens after they sign off on a delivery. Connecting their actions to AP outcomes (delayed payments, duplicate invoices, supplier escalations) gives them context that improves data quality at the source.
Set maximum time-to-complete targets for GRN creation. When invoices arrive before GRNs are in the system, AP teams cannot complete three-way matching and payments stall. A target of completing GRNs within 24 hours of receipt keeps the document flow moving in the right sequence.
Implement exception reporting at the point of receipt. GRN-to-PO discrepancies should be flagged immediately when receiving staff record them, not discovered weeks later during invoice matching. Early detection shortens resolution time and prevents incorrect invoices from entering the approval queue.
Digitize the GRN process. Paper-based receiving workflows introduce transcription errors and delay document flow between the warehouse and AP. Organizations looking to reduce manual handling of procurement and financial documents can explore approaches such as automating financial document processing to accelerate the match between receiving records and invoices.

That fifth step matters more than it might appear. According to the CIPS Global State of Procurement and Supply 2024 report, only 2% of procurement functions are fully automated and 27% are partly automated, based on a survey of 122 organizations with a combined turnover of $73 billion. The majority of organizations still rely on manual or partly manual procurement workflows. The GRN is one of the key documents where accuracy directly affects payment outcomes, and manual processes remain the primary source of the data entry errors that break three-way matching.

Accurate GRN data is the foundation of reliable invoice verification. Organizations that invest in their receiving process through standardized fields, trained staff, timely completion targets, and reduced manual handling gain faster payment cycles, fewer supplier disputes, and cleaner audit trails.