Procurement for your company is a crucial component of its budget. It addresses using company finances to get the materials you need to run your firm at the lowest possible cost.
Procurement is clearly intimately related to the financial operations of your company, as it directly affects up to 70% of its revenue. As so, you must:
- Maintain effectiveness all along the purchase process.
- Look for chances to cut expenses all the time.
- Forge enduring, mutually beneficial supplier relationships and
- For future references, keep careful records of supply information.
One such statistic you must understand is the GRN-based influx of items into your company. A goods received note, or GRN, is a two-way document that certifies that a supplier has delivered the products and that the client has accepted them. A provider is required by contract to supply goods once a customer places a purchase order.
Following delivery, the customer gives the department requesting the supplies three copies of the delivery note, keeps one for the finance department, and gives the supplier one.
Before authorization, the three parties verify the delivery details.
An order is confirmed to have been delivered and received and to have satisfied all parties concerned by a goods received letter.
Why Do You Require a Goods Received Note?
A goods received note (GRN) is a document that verifies that each party has fulfilled their portion of the agreement and keeps that record for future use, should it be needed or if conflicts develop. Some such circumstances are:
Confirming Supply Amount and Quality
It is considered that a supplier delivering ordered goods does so in good faith, meaning that all of the items are supplied in compliance with the specifications requested and will pass quality inspections.
But the client cannot just believe what the supplier says.
The requesting department receives the delivered goods from the procurement/finance division to see if it satisfies their requirements and quality standards.
Goods received notes are sent to the counterparties certifying that the supplies are up to standards and preventing future disputes over quality or quantity provided if the supplies in issue are acceptable.
Issue Handling and Quality Control
Assume for the moment that the department of the asking company discovers a problem they were unaware of before the materials are delivered. A closer inspection of the supplied items now reveals that all of the functionality was tested and operates without a hitch.
As the goods were in excellent condition when delivered, the provider is now free to either insist that the clients find a way around it or replace the supply made in good faith.
Checking Bills While Three-Way Matching
All sizes of businesses can reduce and perhaps completely eradicate invoicing fraud with the help of the three-way matching procedure.
Supplier bills are matched with supply request notes and items received notes using the three-way matching method. These taken together validate that:
- The client made supply request notes specifying a specific amount and quality of supplies.
- The provider has sent the items requested in a satisfactory manner (goods received note), and it is billing for the supplies at the amount and price that were agreed.
This approach makes it simple to find anomalies and foil phoney bills.
Controlling and Revising Stock Levels
Among other documents, goods received notes record that a company has accepted delivery of the requested items.
After that, the supply supplied should show up in the warehouse data. Thus, inventory management and maintaining precise warehouse statistics when supplies are made are accomplished using goods received notes.
What Details Have to Be Included in the Items Received Note?
Goods received notes enable businesses to maintain inventory levels and facilitate binding agreements between suppliers and buyers. Here are the features it employs to do that:
- Organizational name of the provider
- Specifications of the product, including name, size, kind, and technical data
- Arrival time and day
- Volume of the product
- Supplier’s representative’s name and signature
- Organization name receiving
- Receiver’s name and signature
- Purchase order reference
The information needed to maintain the records on items received notes is summed up here.
Problems Processing Received Goods Notes
There is always the possibility of some problem to arise, as with anything procurement-related.
Anticipating these problems and developing procedures and methods to address them can help both sides enjoy a seamless customer-vendor relationship.
Here are some problems you should anticipate running into whether you’re ordering or giving items received notes.
Turnaround Times Too Long
When a provider delivers, a GRN should normally be issued. This isn’t the case, though, in many situations because the department ordering the supplies has to interact directly with the delivered materials to make sure they meet standards.
The need for issuing suppliers to wait until the customer has completed their due diligence may result in delays. More problematic, if the company is bigger, as GRNs can take up to a week to be granted.
On-Time Supplier Communication About Inventory
Say the procurement company finds a problem or two with the items that were provided to them when testing the given goods.
Suppliers may be able to be informed and contacted immediately by smaller companies. But larger companies might just record that in an issue log for select employees to handle.
As the procurement organization is left with useless items and the vendor has both their inventory and cash locked up with the client, this causes needless delay in the operations of both the supplier and the customer.
Errors in Recording Cause Invoice Delays
Three copies of the GRN are given to the supplier, the procurement team, and the ordering department, in that sequence.
One team may easily forget a small element in their own copy during the recording process, which causes delays until the supplier’s invoice is manually untangled when it comes time to settle it.
Controlling the Administrative Labor Needed to Solve GRN Problems
Tough administrative tasks are managing GRNs. Much more so when handling problems with GRNs.
Imagine now that all that effort is placed on the procurement department, who must manually contact suppliers and ordering departments to attempt to find a middle ground in order to disentangle each issue.
Without improving the bottom line, this adds to the administrative burden procurement bears.
Claiming Defective Inventory
It is possible for one defective item of inventory to pass through your rigorous screening procedures without being recognized.
You naturally seek compensation from your suppliers when it happens.
This could be a problem because the provider in question has already carried out a lot of inspections to guarantee compliance with both quantity and quality.
It could thus be challenging to absorb the expense of these problems that are found later.
