A goods received note (GRN) — also called a goods receipt note or receiving report — is the buyer's formal record of what physically arrived against a purchase order: which items, in what quantities, on what date, and in what condition. It is the second document in the three-way AP match (purchase order → GRN → invoice), and the only one created by the buyer rather than the supplier. In a closed-loop procurement platform — a system where ordering, supplier replies, receiving, and accounting handoff run in one connected record — the GRN is generated operationally at the moment of receipt, from a purchase order that already reflects what the supplier confirmed, not what was originally requested.
Quick answers
What is a goods received note? A GRN is the buyer's record that goods have arrived and been counted. It is created at the point of delivery — not when the invoice arrives. It documents what actually came in, not what was ordered or what the supplier says was shipped.
What is the difference between a GRN and a packing slip? A packing slip is the supplier's document — it travels with the shipment and lists what the supplier says they sent. A GRN is the buyer's document — it records what the buyer's team actually counted on delivery. They should agree, but when they don't, the discrepancy is the receiving variance.
What is the difference between a GRN and an invoice? An invoice is the supplier's payment request — it says "pay us this amount for these goods." A GRN says "these goods actually arrived." In three-way matching, the invoice must agree with both the purchase order and the GRN before payment is approved. An invoice for more than the GRN quantity means the supplier is billing for goods that never arrived.
What is a receiving variance? A receiving variance is the difference between the quantity on the purchase order (or the supplier-confirmed quantity) and the quantity actually received. A 10-case shortage, a damaged pallet, a substituted item — all of these appear as receiving variances when the GRN is compared to the PO.
What is the difference between a GRN and three-way matching? The GRN is one of the three documents in three-way matching. The match is the process; the GRN is the receiving leg of that process.
Does a GRN update inventory? In a connected procurement system, yes — the GRN triggers the inventory update for each received line. The quantity on hand increases by the received quantity, not the ordered quantity, and the unit cost is recorded at the confirmed purchase price plus any allocated landed costs.
Required fields on a GRN
A complete goods received note captures enough information to run three-way matching, update inventory accurately, and resolve any receiving dispute with the supplier.
| Field | Purpose |
|---|---|
| GRN number | Unique identifier — links the receiving event to the PO, invoice, and accounting record |
| PO number | Cross-reference to the original order — required for three-way matching |
| Supplier name | Which vendor this delivery is from |
| Received date | The physical delivery date — not the order date or the invoice date |
| Line items | Item code or SKU, description, ordered quantity, received quantity, unit of measure |
| Lot / batch number | Required for expiry tracking, FEFO rotation, and regulated goods (cannabis, pharmaceuticals, food production) |
| Condition notes | Damage, packaging defects, temperature excursions, or any observable quality issue at delivery |
| Receiver name | Who counted and signed off on the delivery |
| Variance notes | Any discrepancy between PO quantity and received quantity, with cause if known |
In enterprise warehouse management systems, the GRN is auto-generated from a barcode scan at the receiving dock. In most SMB operations, it is created manually — on paper, in a spreadsheet, or inside procurement software — within hours of delivery.
GRN vs packing slip
The packing slip is the supplier's claim about what shipped. The GRN is the buyer's verified record of what arrived.
They should agree. They often don't — for several reasons:
- Transit damage: Items ship intact but arrive broken. The packing slip shows 24 units; the receiver counts 22 intact.
- Pick error: The supplier's warehouse pulled the wrong quantity or the wrong item variant.
- Partial fulfillment: The supplier shipped what was in stock and back-ordered the rest, but the packing slip may list the full order or the partial fill depending on their systems.
- Catch-weight discrepancy: For items sold by weight (produce, seafood, meat), the packing slip shows the billed weight and the receiver may find actual weight differs by a few percent.
When the GRN and the packing slip disagree, the buyer has two paths: accept the variance and adjust the invoice accordingly, or file a claim with the supplier. The GRN, signed and dated, is the documentation that supports either resolution.
Never use the packing slip as the receiving record. The packing slip is the supplier's document. It does not reflect what you actually counted. Using it as the GRN means your inventory, your invoice match, and your AP record are all based on what the supplier says arrived — not what you verified.
GRN vs invoice
The invoice is the supplier's payment request. The GRN is your receiving record. Three-way matching compares both against the purchase order.
The critical temporal distinction: the GRN is created at delivery, the invoice typically arrives days or weeks later. In a well-run operation, the GRN already exists by the time the invoice arrives — so the quantity match is a comparison against a documented count, not a reconstruction from memory.
In most SMB workflows, the invoice arrives first and the team scrambles to recall what actually came in. The invoice drives the reconciliation rather than the GRN. This is backwards — and it is the structural source of most invoice disputes and over-payments.
A simple heuristic: if you cannot produce a dated GRN before the invoice arrives, you have no verified baseline for the quantity match. You are paying based on the supplier's claim alone.
Receiving variance
Receiving variance is the quantified difference between what was expected and what arrived.
Receiving variance = GRN quantity − PO confirmed quantity
A negative variance (short delivery) means you received fewer units than the confirmed order — you will need to re-order, issue a partial receipt, or negotiate a credit. A positive variance (over-delivery) is less common but creates the same reconciliation problem: the invoice will be for more units than the order.
Receiving variance matters for three downstream calculations:
Inventory accuracy: If you receive 8 cases but the system records 10 (because no one updated the GRN), your stock is overstated by 2 cases. Every reorder point and safety stock calculation built on top of that overstatement is wrong. Catching the variance at the dock preserves inventory record accuracy. A GRN-based receiving process is effectively a targeted cycle count for every order that arrives.
Invoice matching: If the supplier's invoice shows 10 cases and your GRN shows 8, the quantity match fails. The invoice should be for 8 cases or include a credit for 2. Without the GRN, this discrepancy may not surface until month-end — or at all.
Supplier performance: Receiving variances by supplier, tracked over time, are the raw data behind supplier fill rate and OTIF metrics. A supplier with a fill rate under 90% is creating systematic inventory risk — but you can only measure it if receiving variances are captured on every order.
Partial receipts and split deliveries
When a supplier ships in multiple deliveries — common for backorders, large orders, or freight constraints — each delivery requires its own GRN.
A partial receipt workflow:
- The first delivery arrives. The GRN records the quantities received in that delivery.
- The PO remains open for the outstanding balance.
- The second delivery arrives. A second GRN records those quantities.
- The PO closes when all line items have been fully received.
The invoice should not be paid until the final GRN is created and the cumulative received quantity across all GRNs matches the invoiced quantity. Paying after the first partial receipt means paying for goods that have not yet arrived.
In systems that do not support partial receipt natively, teams work around this by creating a new PO for each delivery — fragmenting the order history and making invoice matching more complex than necessary.
Catch-weight items and unit-of-measure conversions
Some categories are ordered in one unit of measure and billed in another. A restaurant orders 40 kg of beef brisket; the supplier delivers 38.4 kg on the actual scale at the dock. A produce order for 5 cases of tomatoes arrives with cases of slightly different weights.
In these situations, the GRN must record the actual weight or count at delivery — not the ordered quantity — because the invoice will be for the actual delivered weight. The quantity match runs against the GRN weight, not the PO quantity.
Catch-weight items are common in food service procurement, seafood, specialty produce, and any category where goods are priced per-weight rather than per-unit. Getting this right at the receiving dock prevents systematic over-payment on every catch-weight line.
Four-way matching: when a quality acceptance step is added
Three-way matching — PO, GRN, invoice — validates that the right goods arrived in the right quantity at the right price. Four-way matching adds a fourth document: a quality inspection or acceptance certificate.
The receiving team counts what arrived (GRN). A separate quality step certifies that the items passed a defined inspection — condition, temperature, lab results, or safety specification. Only upon quality acceptance does the PO advance to invoicing.
Four-way matching is standard in:
- Regulated retail (cannabis, pharmaceuticals) where a certificate of analysis (COA) or transfer manifest accompanies each delivery
- Food manufacturing and food-grade ingredient procurement where temperature or microbial records are required
- Manufacturing for components subject to incoming quality control (IQC) before entering the production floor
For most SMB retail, restaurant, and wholesale operators, three-way matching is sufficient and four-way matching is overhead without commensurate value.
The SMB receiving reality
In enterprise operations, the GRN is a signed document printed at the dock and filed in the warehouse management system. In most SMB operations, it is informal or absent.
The typical SMB receiving workflow: goods arrive at the back door. The receiving team (often the owner, a manager, or the same person doing ordering) does a quick count, signs the carrier's document, and moves on. A receiving record may or may not be created. If it is, it may live on a clipboard, a handwritten note, or a text message to the buyer.
By the time the invoice arrives — days or weeks later — the informal receiving count is gone. The invoice becomes the de facto receiving record. The question "did we get what they're billing us for" is answered by memory rather than documentation.
This is not a discipline failure. It is a process designed for one staffing model being run under a completely different one. The solution is not to add more paperwork — it is to make GRN creation a natural output of the procurement loop, not a separate administrative step.
How living POs make GRNs accurate
The hardest part of accurate receiving is not counting boxes. It is knowing what you are supposed to be receiving.
In a static PO workflow, the PO represents what was originally ordered — not what the supplier confirmed. By the time goods arrive, the supplier may have substituted items, reduced quantities, or shipped a partial order with the rest on back order. The receiver does not know this because the confirmation lives in an email thread, not in the PO. The receiver compares what arrived against the original order, sees a variance, and cannot tell whether the variance is a supplier error or a known change.
In a closed-loop procurement workflow, the PO is a living document that absorbs supplier confirmations before goods arrive. When the supplier replies — via email, WhatsApp, EDI, or portal — the confirmed quantities, substitutions, and ETA updates are applied to the PO. The receiver checks arrival against the confirmed state of the order, not the original request. A short count is a genuine shortage; a different item is a substitution the receiver was not told about; the quantities match because the PO already reflected what the supplier said they would ship.
This sequence — confirm before receive — is what makes receiving a verification step rather than a detective exercise.
At LineNow, the supplier-reply layer updates the living PO before goods arrive, so the receiving team works from the confirmed order state. One-click receiving creates the GRN. If what arrived differs from the confirmed PO, the discrepancy surfaces immediately with the dollar variance pre-calculated. The invoice, when it arrives, is matched against a PO and GRN that are already in sync — which is what the three-way match was designed to do in enterprise environments where those documents are kept current by dedicated purchasing teams.
Start your 90-day free trial at linenow.co — run your first living PO this week and see what receiving looks like when the confirmed order state is waiting at the dock.
Related
- Three-Way Matching: PO, GRN, and Invoice Reconciliation — the GRN is the receiving leg of the three-way match; this glossary entry covers how the match works, what breaks it at SMB scale, and how living POs close it before AP arrives
- Purchase Order (PO): Definition, Anatomy, Lifecycle, and When to Use One — the PO is the first document in the three-way match; the GRN is checked against it at receiving
- Three-Way Matching vs. Living POs: Reconcile Before AP — why upstream reconciliation through a living PO produces a cleaner GRN than enterprise-style retroactive matching
- Why Your Invoice Never Matches Your PO (And How to Fix It Structurally) — the structural cause of invoice mismatches is that the PO goes stale before the GRN is created
- Fill Rate vs Service Level: The Metric Most Operators Confuse — receiving variances across GRNs are the raw data that produce fill rate measurements by supplier
- Landed Cost: Formula, What It Includes, and How It Changes Your Procurement Math — landed cost allocation runs against the GRN quantities, not the PO quantities, so receiving accuracy affects per-unit COGS
- Incoterms 2020: FOB, CIF, DDP, and What Each Term Does to Your Landed Cost and Receiving Workflow — the Incoterm determines who bears risk between ship and dock, which changes how the receiving team handles damage notes on the GRN
- Cycle Count (Inventory): How to Run One and Why ABC Tier Cadence Matters — every GRN is effectively a targeted count of the received SKUs; accurate receiving and accurate cycle counting reinforce each other