Goods Received Not Invoiced (GRNI)

Goods Received Not Invoiced (GRNI) is an accounting accrual that represents the value of goods or services the business has received and accepted but for which no supplier invoice has yet been recorded in the AP system. The GRNI balance sits in the current liabilities section of the balance sheet as an accrued liability -- the business owes money to the supplier but has not yet received or processed the invoice that documents the liability.

The GRNI accrual is necessary under accrual accounting because the expense is incurred when the goods or services are received, not when the invoice arrives. A business that receives a delivery of raw materials in March but receives the supplier's invoice in April must accrue the cost in March -- otherwise the March financials will understate cost of goods sold and the April financials will be overstated. For businesses with long supplier invoice processing cycles or suppliers who invoice infrequently, GRNI balances can be substantial and material to the balance sheet.

How GRNI works in the three-way match process

In a three-way match process (purchase order + goods receipt note + invoice), the goods receipt note (GRN) is the trigger for the GRNI accrual. When a goods receipt is confirmed in the purchasing or warehouse system, the accounting system creates an accrual entry: debit the relevant expense or inventory account, credit the GRNI clearing account. When the supplier's invoice arrives and is matched to the GRN and PO, the GRNI clearing account is debited (reversing the accrual) and the trade creditors (accounts payable) account is credited with the actual invoice liability.

If the invoice amount matches the GRN value within the configured tolerance, the clearing account nets to zero and the actual invoice is recorded in the AP ledger at the full liability amount. If the invoice differs from the GRN -- due to price variances, quantity differences, or additional charges -- a purchase price variance or invoice exception is created for review and resolution.

Managing the GRNI clearing account

The GRNI clearing account can accumulate stale balances if invoices are not received or if the matching process fails. A GRN that generates a GRNI accrual but for which no invoice ever arrives -- because the supplier did not complete delivery, the delivery was returned, or the GRN was raised in error -- will leave an open balance in the clearing account indefinitely unless it is investigated and written back. Regular GRNI clearing account analysis -- reviewing all open items aged over 60 days and investigating why the corresponding invoice has not been received -- is a standard AP control that prevents balance sheet misstatement from accumulating.

For businesses implementing three-way match for the first time, the GRNI accrual process is often the most conceptually unfamiliar element. The clearing account creates a temporary balance that disappears when the invoice is matched -- which looks wrong to people accustomed to recording only actual invoices -- but this is the correct accounting treatment and is required for accurate period-end financial reporting.