What Is a Goods Received Note (GRN) and Why Is It Critical for Your AP Process?

When an invoice lands in your system, how do you know the goods were actually delivered—and delivered correctly?

Without a clear way to verify deliveries, accounts payable teams are left chasing emails, calling warehouse staff, or digging through spreadsheets. This slows down approvals, delays payments, and increases the risk of errors like duplicate invoices or unauthorized payouts. Worse, it can compromise compliance and audit readiness.

A Goods Received Note (GRN) solves this. It’s a document created by the receiving department to confirm that the ordered goods were delivered in the right quantity, quality, and condition. It acts as a bridge between procurement, receiving, and accounts payable - making sure everyone has the same version of the truth.

In this blog, we’ll break down:

• What a GRN is and how it works
• Why it’s critical for AP accuracy, fraud prevention, and compliance
• Best practices to manage GRNs in both manual and automated AP workflows

If your AP team is still relying on verbal confirmations or scattered delivery receipts, this guide will show you how a simple document like the GRN can make a major impact on payment accuracy, supplier relationships, and audit confidence.

What Is A Goods Received Note (GRN)?

A Goods Received Note (GRN) is an internal document created by a company’s receiving or warehouse team to confirm the arrival of goods from a supplier. It serves as an official record of what was delivered, in what quantity, and in what condition - providing concrete evidence that the order was fulfilled.

More than just a formality, the GRN is a foundational source document within the procure-to-pay workflow. It acts as a crucial communication bridge, connecting the procurement, receiving, and accounts payable departments. By creating an undisputed record of what was received, it ensures all teams are aligned on the status of an order before an invoice is processed for payment, thereby preventing discrepancies before they can enter the accounting system.

Who creates and uses a GRN?

A GRN is typically created by the receiving or warehouse team, but its value extends across departments - supporting procurement, inventory, finance, and even suppliers.

1. Procurement department: Procurement Team: Uses the GRN to close out POs and assess supplier performance. Frequent mismatches between orders and GRNs can highlight fulfillment issues.

2. Inventory team: Relies on the GRN to accurately update stock records. It acts as the trigger for shifting goods from "in-transit" to "on-hand" status in the inventory management system—critical for maintaining accurate inventory data used in production planning and order fulfillment.

3. Finance / accounts payable team: Uses the GRN as part of the three-way matching process to validate vendor invoices before payment. It ensures payment accuracy, prevents overbilling, and supports accurate month-end accruals by accounting for goods received but not yet invoiced.

4. Supplier (optional): May receive a copy of the GRN as confirmation of successful delivery. This reduces the likelihood of disputes around shipment quantities and can help accelerate their accounts receivable process.

The Goods Received Note (GRN) plays a pivotal role in the Procure-to-Pay (P2P) cycle, acting as a bridge between the physical receipt of goods and the financial validation required for payment. It ensures that procurement, logistics, and finance stay aligned, preventing costly errors and delays in the AP workflow.

Where Does the GRN Fit in the Accounts Payable Process?

Here’s how the GRN fits into the typical accounts payable process:

1. Purchase order raised: The procurement team issues a Purchase Order (PO) to the vendor, specifying the type, quantity, and agreed pricing of goods or materials.

2. Goods shipped by vendor: The vendor fulfills the order and dispatches the goods, typically along with a Delivery Note that serves as their proof of shipment.

3. Goods received and inspected: Upon arrival, the receiving or warehouse team inspects the goods against the PO, verifying quantities and checking for damages or discrepancies. Once verified, the team generates the GRN to document exactly what was received and in what condition. This marks the formal transfer of responsibility from logistics to finance.

4. Invoice submitted by vendor: The vendor sends an invoice to the accounts payable (AP) department, requesting payment based on the fulfilled order.

5. Three-way matching by AP: The AP team matches the vendor invoice with the corresponding PO and GRN. This 3-way matching in Accounts Payable validates that:

• The price aligns with the PO
• The quantity matches the GRN
• The terms are consistent across all three documents.

Without the GRN, this step becomes speculative, forcing the AP team to rely on manual follow-ups and assumptions, which increases the risk of errors, payment delays, or even fraud.

Why the Goods Received Note Is Critical for Financial Accuracy and Risk Control?

The Goods Received Note is more than a logistics form—it serves as a foundational control to ensure goods received align with what was ordered, enabling financial accuracy and preventing procurement risks. Beyond record-keeping, the GRN plays a critical role in managing working capital, verifying vendor performance, and creating a reliable audit trail.

1. Prevents incorrect payments

The GRN is the primary check that ensures a company only pays for what it has physically received. This control is essential to safeguard working capital and prevent unnecessary cash outflows. Verifying deliveries before payment helps businesses avoid paying for missing, incorrect, or damaged items—ensuring payments are made only for goods that were actually delivered.

2. Enables accurate invoice matching

The GRN is a core input in the 3-way matching process—validating vendor invoices against what was ordered and received. This reduces AP exceptions and discrepancies, which in turn lowers invoice processing costs and accelerates payment cycles.

3. Maintains accurate inventory records

In inventory-based operations, the GRN is the trigger for updating stock records in the inventory management system. Timely GRN processing ensures that financial statements reflect actual inventory assets, and supply chain planning is based on accurate data—reducing the risk of stockouts or overstocking. Without this accuracy, even small mismatches can lead to the “bullwhip effect,” where minor errors cascade into major disruptions across the supply chain.

4. Creates a clear audit trail

The GRN provides time-stamped, verifiable proof of goods received—critical for both internal controls and external audits. It supports compliance with regulations like Sarbanes-Oxley (SOX), helps resolve supplier disputes with documented evidence, and can be essential for filing insurance claims in cases of loss or damage in the warehouse.

What Information Is Included In A Goods Received Note?

To be effective as a control document, a GRN must contain specific, standardized information. This level of detail is necessary for complete traceability, allowing anyone to reconstruct the events of a delivery for verification or audit purposes. While formats may vary across organizations, a standard GRN typically includes these essential details:

• Supplier’s name and details
• Product description, including item codes or SKUs
• Quantity of goods received
• Quantity accepted and rejected, with optional notes for reasons (e.g., damage, wrong item)
• The corresponding Purchase Order (PO) number
• Date and time of delivery
• Name and signature (or system log-in credentials) of the receiving officer

Requirements For Implementing A Goods Received Note System

Establishing a formal GRN process requires more than just a template; it requires a structured system. Key requirements include:

1. Documented procedures: Develop a standard operating procedure (SOP) that details how to handle incoming goods, including partial deliveries, back-orders, damage, and discrepancies, to ensure consistency and audit-readiness across all receiving activities.

2. Defined roles and responsibilities: Assign clear ownership across functions. Warehouse teams should be trained to inspect goods and complete the GRN accurately. The AP team should know how to use it in the three-way match, and procurement must understand how to act on any discrepancies recorded.

3. Fit-for-purpose tools: Small businesses might use carbon-copy GRN pads, but these are error-prone and hard to track. Modern alternatives include ERP-integrated GRN modules or dedicated receiving tools that improve accuracy, visibility, and audit trails. Tools should be user-friendly to ensure consistent adoption by the receiving team

4. Integration with procurement: The GRN process cannot exist in a silo. The receiving team must have real-time access to purchase order information to accurately verify incoming shipments against what was ordered. A disconnect here is a primary source of downstream exceptions.

Common Challenges With Manual GRN Processing

Manual, paper-based GRNs are not only inefficient, they introduce significant operational risk into the accounts payable process.

1. Lost or delayed paperwork: Paper GRNs are easily misplaced or delayed en route from the warehouse to finance. This single point of failure stalls invoice matching, delays payments, strains supplier relationships, and eliminates opportunities for early payment discounts.

2. Human error: Manual data entry is a major source of costly inaccuracies. For example, a receiving clerk might accidentally type "1,000 units" instead of "100." This simple mistake can lead to a significant overpayment if not caught, or hours of investigative work for the finance team to reconcile the discrepancy between systems.

3. Time-consuming matching: In a manual environment, AP teams dedicate a disproportionate amount of their time to low-value, repetitive tasks like chasing down GRNs and visually matching them line-by-line. This administrative burden inflates the cost-per-invoice and pulls skilled finance professionals away from more strategic activities like spend analysis, cash flow optimization, or vendor negotiations.

4. Lack of visibility: Without centralized systems, finance leaders lack real-time visibility into what’s been received vs. invoiced. This impairs accrual accuracy, cash flow forecasting, and overall accounts payable reporting, often leading to unplanned cash shortfalls.

How Automation Improves The Goods Received Note Workflow

AP automation directly transforms Goods Received Note (GRN) processing from a manual, error-prone task to a streamlined, high-efficiency operation.

In the manual world, GRN processing is slow and reactive—paper slips circulate from the dock to desks, data is re-keyed multiple times, and the AP team chases missing information. With automation, this process shifts to one of real-time accuracy, control, and visibility.

1. Digital creation and capture

Instead of filling out paper forms, warehouse teams can create a digital GRN directly at the loading dock using mobile devices. The data—item codes, quantities, timestamps—is captured at the source and instantly synced to the central AP system, eliminating delays and transcription errors.

2. Automated three-way matching

Modern AP automation platforms instantly match the GRN with the corresponding purchase order and invoice. This three-way match happens in seconds, with matched transactions automatically routed for payment approval—completely touchless, reducing both processing time and risk of human error.

3. Real-time visibility and control

All stakeholders, such as procurement, finance, and warehouse teams, gain access to live updates on goods receipt status. The AP team shifts from manual data entry to exception handling, focusing only on flagged mismatches that require human intervention. This not only reduces cycle time but also elevates the strategic role of finance teams.

How HighRadius Can Help?

HighRadius’s AP Automation solution simplifies and accelerates the GRN workflow by creating a single, digital ecosystem for invoice matching and reconciliation. Here’s how:

1. Automated GRN capture & integration
Automatically sync Goods Received Notes into your AP system to eliminate manual entry, reduce errors, and ensure every receipt is linked to the correct PO and invoice.

2. Three-way matching automation
Instantly validate supplier invoices by matching them with both POs and GRNs. The system flags mismatches in real time, reducing compliance risk and accelerating invoice approvals.

3. Exception handling & approval routing
Mismatches are automatically categorized and routed for review, ensuring faster resolution and fewer processing bottlenecks.

4. Centralized GRN visibility
Get real-time insights into delivery activity—what was received, when, and in what quantity—enabling accurate invoice validation and better collaboration across teams.

5. Analytics for GRN-linked performance
Monitor delays, match rates, and supplier compliance with rich analytics. Use these insights to continuously refine your procure-to-pay processes and drive operational efficiency.

If you're struggling with lost GRNs, delayed invoice matching, or unreliable accruals, it's time to rethink your approach. Manual processes can’t keep up with the pace and precision finance teams need today. 

HighRadius helps eliminate these bottlenecks by automating GRN capture, integrating it seamlessly with your AP workflows, and giving your team the visibility and control to move faster with fewer errors. Whether you're looking to tighten internal controls, reduce cycle times, or gain better supplier insights, HighRadius provides the technology to modernize your GRN process from receipt to reconciliation.

FAQs on Goods Received Notes

1. What is a goods receipt note?

A goods receipt note is the same as a Goods Received Note (GRN). Both terms refer to the official internal document a company creates to confirm receipt of goods from a supplier. It serves as formal proof of delivery before an invoice is paid.

2. Who sends a goods received note? 

The GRN is created and sent internally by the receiving or warehouse department of the company that bought the goods. It is then shared with the procurement and accounts payable teams to update records and approve payments. The supplier does not create or send it.

3. What is the difference between a delivery note and a goods received note? 

A delivery note is an external document from the supplier that lists the contents of a shipment. In contrast, a Goods Received Note (GRN) is an internal document created by the customer after inspecting the delivery, confirming what was received and its condition.

4. What is the purpose of a GRN? 

The primary purpose of a GRN is to provide official internal proof that a delivery has been received. This critical document enables accurate three-way invoice matching, ensures inventory records are updated correctly, and creates a clear audit trail for financial verification and dispute resolution.

5. What is the difference between a goods received note and a service received note?

A Goods Received Note (GRN) is used to confirm the delivery of tangible, physical products. A Service Received Note (SRN) or Service Entry Sheet (SES) serves the same purpose but for intangible services, confirming that a contracted service was performed to the agreed-upon standard.