Purchase Order vs GRN: A Guide for Pakistani Businesses

A purchase order and a goods received note describe two different moments in buying stock. The purchase order records what you asked a supplier to send. The goods received note records what actually arrived.

Keeping both matters because an order, delivery and supplier invoice do not always agree.

What is a purchase order?

A purchase order (PO) is created before the delivery. It tells the supplier what the business intends to buy.

A useful PO normally includes:

• Supplier
• Order date and expected delivery date
• Product, SKU and unit
• Quantity ordered
• Agreed purchase price and discounts
• Tax where applicable
• Delivery branch or warehouse
• Person who prepared or approved the order

The PO is a commitment and a reference. It should not increase stock because the goods are not physically in the shop yet.

What is a GRN?

A goods received note (GRN) is created when the delivery is checked. It records what the business actually accepted into stock.

The GRN should show:

• The related purchase order, where one exists
• Supplier and delivery reference
• Product and quantity received
• Short, excess, damaged or rejected quantity
• Actual cost confirmed at receipt
• Branch receiving the stock
• Person who checked the delivery

Completing the GRN is the point at which accepted quantities should enter inventory.

PO vs GRN

Question	Purchase order	Goods received note
When is it created?	Before delivery	At delivery
What does it record?	What you requested	What you accepted
Does it increase stock?	No	Yes, for accepted quantities
Main purpose	Authorise and communicate the order	Verify delivery and update inventory
Useful comparison	PO vs supplier confirmation	GRN vs PO and supplier invoice

Example: a partial delivery

Suppose a hardware shop orders 100 switches and 50 LED bulbs.

The supplier delivers 100 switches but only 35 bulbs. Five of the switches are damaged and rejected.

• The PO remains the record of 100 switches and 50 bulbs ordered.
• The GRN records 95 switches and 35 bulbs accepted.
• Stock should increase by the accepted quantities, not the ordered quantities.
• The remaining 15 bulbs can stay outstanding, be cancelled, or arrive on another delivery.
• The supplier invoice should be checked against what was accepted and the agreed commercial arrangement.

If the business skips the GRN and adds the whole PO to stock, the system claims to hold items that never reached the shelf.

A reliable purchasing workflow

1. Create the purchase order with agreed quantities and costs.
2. Submit or approve it according to the business process.
3. Check the delivery against the PO when it arrives.
4. Record accepted, short, excess and rejected quantities in the GRN.
5. Update stock only for accepted goods.
6. Compare the supplier invoice with the PO and GRN.
7. Record purchase returns separately if accepted goods later go back.
8. Keep supplier payables tied to the purchasing record.

Common mistakes

• Adding ordered stock before it arrives
• Receiving every line in full without physically checking it
• Changing the original PO to hide a short delivery
• Mixing pieces, boxes and cartons without a clear conversion
• Ignoring damaged or rejected quantities
• Paying the supplier invoice without comparing it with the PO and GRN
• Sending goods back without a purchase-return record

Connect purchasing to inventory

The value of a PO and GRN comes from the connection between them. invo.pk inventory management links supplier purchasing to branch stock, purchase returns and stock history. You can also use the Reorder Point Calculator to estimate when a fast-moving product should enter the next order, or follow the physical stock count guide to verify what reached the shelf.