Goods received not invoiced (GRNI): what it is and how to keep it clean

What is goods received not invoiced?

GRNI is a temporary liability account that holds the value of goods received from suppliers until their invoices are recorded. It exists because goods and invoices rarely arrive on the same day. A delivery comes in on 12 September; the supplier’s invoice follows on 6 October, or at the end of the month on a statement.

In between, you own the goods and you owe the supplier for them. Accrual accounting says both facts belong in the books now, not when the paperwork catches up. GRNI is how you record the debt before the invoice exists.

You may also see it called “uninvoiced receipts” or “received not billed”: an accrued liability that every receipt adds to and every matched invoice takes away.

Why do you need a GRNI account?

Without GRNI, your books are wrong every month-end in one of two ways.

• Stock without a liability. If the warehouse records the goods but accounts wait for the invoice, the stock report shows AED 15,300 of valves that the ledger doesn’t. Your stock report and your balance sheet disagree by exactly the uninvoiced receipts. We cover that problem in why your stock report and your accounts never agree.
• Cost in the wrong month. If the goods are sold before the invoice arrives, cost of sales lands a month late and margins swing from month to month for no commercial reason.

GRNI fixes both. The receipt puts the stock and the liability on the books together. The invoice then replaces the estimated liability with the real accounts payable.

How GRNI accounting works, step by step

GRNI accounting follows the documents, one journal at each step that changes what you own or owe.

1. Purchase order issued: no entry. A purchase order is a commitment, not a transaction. Nothing has been received and nothing is owed yet.
2. Goods received: Dr Inventory, Cr GRNI. When the goods are checked and accepted, stock goes up at the order price and GRNI records the debt. Only accepted quantities count; short and rejected quantities don’t.
3. Month-end: GRNI sits on the balance sheet. Any receipt not yet invoiced stays in GRNI as a current liability. That is correct, as long as the receipts behind it are recent and genuine.
4. Supplier invoice: Dr GRNI, Dr Input VAT, Cr Accounts payable. The invoice clears GRNI for the receipts it covers, recognises the recoverable input VAT and books the real payable. Any difference between the invoice and the order goes to a variance account, never back into GRNI.

Worked example: a domestic purchase in AED

A fictional UAE trading company orders 200 gate valves at AED 85.00 each. VAT is 5%.

Three things to notice:

• The 20 short valves never enter GRNI. They are still open on the order, not owed.
• GRNI is cleared at exactly the amount the receipt credited, AED 15,300.00, so it goes back to zero for this receipt.
• The supplier charged AED 1.00 more per valve. That AED 180.00 lands in an invoice price variance account where someone can see it, not hidden inside stock or GRNI.

What happens when the invoice price differs from the order?

When the invoice price differs from the order price, you have three choices, and the important thing is to pick one deliberately.

• Post it to an invoice price variance account. Simple and visible. Review the account every month: a growing balance means order prices are out of date or suppliers are adding increases.
• Adjust stock and cost of sales. The supplier’s price is the true cost of purchase. If the difference is material, move the part relating to units still in stock back into inventory and the rest to cost of goods sold.
• Reject the difference. If the order price was agreed, send the invoice back or ask for a credit note.

If you use standard costing, a second variance appears earlier. At receipt, the difference between the standard cost and the order price goes to a purchase price variance account. At invoice, the difference between the order price and the invoice price goes to invoice price variance. The two tell different stories: one about your standards, the other about your suppliers.

How do exchange rates affect GRNI?

Foreign-currency purchases add an exchange difference between the receipt date and the invoice date. Under IAS 21, a foreign-currency transaction is first recorded at the spot rate on the transaction date, and the exchange difference on settlement or retranslation of a monetary item goes to profit or loss.

Here is a fictional AED company buying from a European supplier, with illustrative rates and no VAT to keep the exchange effect visible.

The payable is AED 1,460.00 higher than the receipt value, and the journal says why: AED 600.00 is the currency and AED 860.00 is the supplier’s price. Keeping them apart stops a currency movement being mistaken for a supplier problem.

One more point for month-end: GRNI in a foreign currency is a monetary liability. Under IAS 21, open monetary items are retranslated at the closing rate at each reporting date. If you have large foreign-currency receipts waiting for invoices over a month-end, agree the treatment with your auditor.

Why does the GRNI balance keep growing?

A growing GRNI balance almost always means receipts and invoices are not being matched. The usual causes:

• Suppliers invoice late, or only send a monthly statement.
• Invoices are posted straight to expense or payables without being matched to the receipt. GRNI is never cleared, and the cost is counted twice.
• Price or quantity disputes hold invoices in someone’s inbox.
• Receipts are recorded against the wrong order, or recorded twice.
• Rejected or returned goods stay in GRNI because the receipt was never corrected.
• Free-of-charge items such as samples are received at the order price, so no invoice will ever come.
• Nobody owns the review, so old items quietly become permanent.

How do you keep GRNI clean?

Keep GRNI clean with a monthly routine that works from the receipts, not from the ledger balance. Make it part of your month-end close.

1. List every open receipt with its supplier, order, date, age and open value.
2. Tie the list to the ledger. The total of open receipts should equal the GRNI balance. If it doesn’t, someone has posted to GRNI directly.
3. Age it: 0–30, 31–60, 61–90 and over 90 days.
4. Chase the oldest first. Ask the supplier for the invoice or a statement.
5. Resolve disputes: agree the price and revise the order, or agree a credit for short or rejected goods.
6. Clear genuine residuals with an approved journal and a written reason, such as goods confirmed free of charge.
7. Fix the root cause. If invoices are being posted without matching, change the process, not just the balance.

GRNI review template

A fictional review at 30 September, in AED. Copy the columns into your close file.

The last row is the one to worry about: the cost was booked twice, as stock through the receipt and as expense through the invoice.

How 1flux handles this

1flux runs GRNI accounting from the receiving documents themselves, so the receipt and the invoice post their own journals and GRNI clears itself when they’re matched.

For the full buying cycle from requisition to payment, read the procure-to-pay guide.