Goods Receipt Note (GRN) in eCommerce

Introduction

A shipment doesn't need to be delivered by a single carrier/ logistics company. Often, shippers send through a network of carriers or shipping platforms to ensure quicker deliveries at affordable rates.

In such cases, verifying the delivery without having to contact the recipient manually can become difficult. To get around this, the logistics sector developed the Goods Receipt Note (GRN).

As it is the actual proof of the completion of the delivery, it is equally important to the seller and the buyer.

Hence, you need to understand the concept of GRN before you start trading heavily. In this blog, we will discuss GRN in depth to make the entire purchase process easier for you.

What is a Goods Receipt Note?

A Goods Receipt Note or GRN is a document that acknowledges that the delivery has been executed successfully by the seller to the customer.

This receipt conveys that the goods have been delivered without any forthcomings like damage, exposed packaging or wrong product.

Therefore, GRN is an essential factor in determining whether the logistics contract was followed by both parties.

A GRN is a vital tool in the procurement process. Once the delivery is completed by the carrier, different departments verify the contents of the received shipment to issue the receipt note.

This note is then verified by different departments and entities to confirm that the seller has adhered to the terms of the contract while shipping and selling the goods.

The buyer has the right to and must conduct physical verification of the quantity and quality of the received goods before issuing a GRN.

Once the GRN is accepted, it becomes the official document to denote the quantity and quality of the goods received in case of further disputes. Therefore, if any discrepancies are found later on, the seller cannot be held liable for the same.

What is the purpose of GRN?

The primary purpose of GRN would be the acknowledgment of delivery to the consignee where the content of the commodities is received in satisfying condition. And the signature of the receiver is registered on the receipt. This receipt is further used to:-

1. Keep track of the supply chain operations

Since the GRN is the official acknowledgment of the goods from the buyer’s end, it can be an effective tool to track and measure the performance of your supply chain. You can track the inventory and activity at different points in your supply chain and measure various KRAs by tracking the GRNs. 

2. Inventory management

The Goods Receipt Note is an excellent tool for maintaining and monitoring inventory levels across different touchpoints in your supply chain. Since the receipt is only issued after the verification from all concerned entities, it enables better inventory management.

3. Record keeping

Tracking each and every move in a vast supply chain can be cumbersome. These receipts can be an ideal medium to maintain records through a centralized and standardized format across your entire supply chain.

4. Prevent wrong deliveries

One of the primary purposes of a GRN is to ensure that the delivery is received in adherence to the contract between the seller and the buyer. Therefore, it becomes an important safeguard to protect the buyer from accepting any wrong deliveries that may lead to monetary losses.

5. Safeguard from malpractice

The virtual nature of the modern procurement supply chain leaves the buyer prone to malpractices. A GRN empowers the buyer to verify their purchase post-delivery to ensure that the seller has held to their end of the purchase contract.

6. Avoid errors in the delivery system

While technology has significantly increased the delivery supply chain's accuracy, errors are still possible. If your shipment was lost, interchanged, or damaged, the Goods Receipt Note allows you to verify it before the liability is transferred.

7. Maintaining liability of parties involved

The liability of the shipment can be tricky, especially when it involves high-value items. The receipt note safeguards the interests of the buyer and the seller by establishing a concrete and foolproof way to transfer the liability of the goods.

Contents of a Standard Goods Receipt Note

A standard GRN will contain the following elements:-

• Shipper information

• Product dimensions and type

• Delivery time

• Delivery address

• Quantity of commodities

• Details of the receiver

• Signature of the receiver

• Order number 

All these elements are vital to ensure that there is no miscommunication once the GRN is issued, as well as no information is missed in case the note ever has to be used in an official capacity.

4 Benefits of GRN

Using a GRN allows you to have an official record of verification of the delivery. This enables you to avail multiple benefits like:

• Tracking the time and place of the final delivery

• Assisting suppliers to go forward quickly with payment authorization

• Negating risks of authorizing faulty and damaged goods

• Making it simple to take up issues of stolen and lost goods

6 Common Issues with Using GRN

While using a GRN may seem like a good idea, it does add an extra step to the delivery process. Along with that, there are several common issues that businesses face when they try to incorporate the receipt note in their procurement process. Some of the common issues are highlighted below.

1. Increased time to delivery completion

2. Delayed Communication with the Supplier/seller

3. Manual errors or record discrepancies between the GRN issued by various departments

4. Increased admin workload

5. Errors in the verification of the received goods

6. Delays in Invoicing and Bill Settlement

How is the GRN issued?

Once the carrier hands over the goods to the customer, the goods are unloaded under the supervision of the buyer. The buyer will run a few physical tests to confirm that the seller has adhered to the purchase contract terms.

These goods are then verified by several departments within the organization, including procurement, admin, store, etc., to verify the quantity and quality of the goods.

In case the seller/supplier has not met the required quantity/quality standards, the buyer has to inform the seller and get the issue rectified. The store then verifies and approves the goods received and issues copies of the GRN to the concerned department.

A copy with the manager’s signature is provided to the supplier to acknowledge the receipt and approval of the goods. The received goods' records are updated in the inventory ledger, and the system reflects the updated inventory levels.

Conclusion

To sum up, the Goods Receipt Note (GRN) is a two-way receipt for the seller and the customer that validates the successful delivery of commodities.

It verifies the content received to all parties by verifying the quality and quantity of the received goods. Once the buyer issues the GRN, the liability for the safety of the goods is transferred to the buyer.

In case of further disputes, the GRN will be treated as an official document for the goods. The note enables the buyer to maintain a proper procurement record and update inventory across the supply chain to enable better inventory management.