Purchase Orders and GRN Discipline

A steel truck arrives at 6 pm. The driver wants to leave, the invoice says 8.000 tonnes, and the supervisor signs the challan on the truck's bonnet without counting anything. Three weeks later the reconciliation shows steel missing, and there is no way to know whether it was short-delivered, over-issued, or stolen — because the one moment when the quantity could be verified was signed away in thirty seconds.

Procurement control has exactly two anchor documents. The purchase order fixes what you agreed to buy. The goods received note fixes what actually arrived. Everything else — invoice checking, payment, reconciliation — is arithmetic between those two.

The PO: seven things that must be in writing

A PO can be one page. It is not optional, and "we have WhatsApp chats" is not a PO. Minimum contents:

1. Specification — grade and standard, not just the material name: "Fe 500D TMT to IS 1786, brand X" not "sariya." "PPC, 50 kg bags, brand Y" not "cement."
2. Quantity with unit — and dia-wise or size-wise breakup where it applies.
3. Rate — basic per unit, GST separate, matching the comparative statement.
4. Delivery point and freight terms — FOR site or ex-godown, who pays loading and unloading.
5. Delivery date — a required-by date, and for phased supply, a schedule.
6. Payment terms — advance, against delivery, or credit days; any agreed discount in writing.
7. Quantity basis — for steel, this line saves real money: "payment on actual weighbridge weight" or "on standard section weight," decided before delivery, not argued after.

One more habit that costs nothing: a PO serial number. Numbered POs make the three-way match and the monthly committed-cost report (Lesson 6) possible.

The GRN: recording what actually arrived

The GRN is filled by the person receiving — storekeeper or site engineer — at the time of delivery, before the truck leaves. It records: PO reference, date, vehicle number, material, quantity actually received (counted or weighed, with the method noted), condition and quality observations, shortages or rejections, and the receiver's signature. The supplier's challan claims; the GRN verifies.

Quality gate at the gate, material by material: cement — brand, grade, week of manufacture on the bag, no hardened lumps; steel — brand and grade embossed on the bar, mill test certificate for the heat number where specified; bricks — sample ring test and size check (brick sizes and kiln quality vary by region — the approved sample brick, kept on the engineer's table, becomes the standard the GRN's quality column is judged against); aggregate — visual for silt and oversize. Rejection happens at the gate; a rejected lot that has been unloaded and mixed into stock is a lost argument.

This file earns its keep long after delivery. A RERA-registered developer carries statutory quality obligations, and the GRN-plus-test-certificate file is how "we used Fe 500D from a certified mill" is proved rather than claimed; for an owner-builder, the same file is the first thing a structural consultant asks for if something cracks in year three. And at month end, the three-way match is what disciplines the dealer khata: the khata bill is paid line by line against GRNs, so "adjustment" entries and re-billed rejected lots die in reconciliation instead of passing quietly into the total. Documentation is not bureaucracy here — it is the only currency disputes accept.

The three-way match is the payment rule that makes the two documents bite: an invoice is paid only when invoice, PO, and GRN agree — item, rate (vs PO), and quantity (vs GRN). Where they disagree, the GRN wins on quantity and the PO wins on rate, and the difference becomes a debit note, not a discussion.

Worked example: receiving 8 tonnes of 12 mm steel

PO: 8.000 t of 12 mm Fe 500D, Rs. 58 per kg + GST, FOR site, payment on actual weighbridge weight. The truck arrives with an invoice for 8.000 t. Two independent checks, ten minutes total:

Check 1 — count and theory. The load is 150 bundles of 5 bars, each 12 m long.

• Total bars = 150 x 5 = 750
• Total length = 750 x 12 = 9,000 m
• Unit weight of 12 mm = d2/162 = 144/162 = 0.889 kg/m
• Theoretical weight = 9,000 x 0.889 = 8,001 kg — consistent with the invoice. Good: the count matches the claim.

Check 2 — the weighbridge. Theory is not payment. The PO says actual weight, so the truck crosses a weighbridge: gross 16.245 t, tare (empty truck, weighed after unloading) 8.400 t.

• Net delivered = 16.245 - 8.400 = 7.845 t
• Shortage vs invoice = 8.000 - 7.845 = 155 kg (about 1.9 percent)
• Value at Rs. 58 per kg = 155 x 58 = Rs. 8,990

The GRN records 7.845 t with both weighbridge slip numbers attached. Accounts pays for 7.845 t; the Rs. 8,990 difference is a debit note against the invoice. No argument, because the PO fixed the quantity basis in advance.

Why can theoretical and actual differ even with nobody cheating? Rolled bars have a rolling margin — actual mass per metre varies slightly from the nominal d2/162 value within tolerances permitted by IS 1786. That is precisely why the PO must say which basis governs payment. A systematic gap in one direction across deliveries, though, is not rolling margin — it is a pattern, and your GRN file is what proves it.

Counting shortcuts that hold up: steel — count bundles, multiply by bars per bundle, spot-open two bundles to verify the count; bricks — count one full stack layer by layer, then count stacks (do not accept "5,000 bricks" loose-tipped without a stack count); cement — count bags during unloading in tally marks of 10, and weigh two random bags (a 50 kg bag under 49.5 is worth flagging); sand and aggregate — measure the truck bed and struck level, or weighbridge it; brass claims shrink remarkably when the tape comes out.

From GRN to stock register

The GRN is the entry document; the stock register (or bin card) carries the running balance: every receipt (GRN reference) and every issue (to which work, signed by whom) with a daily balance. Receipts minus issues must equal physical stock on any surprise count. This register is what makes Lesson 5's reconciliation possible — without issues recorded against work items, consumption cannot be compared to theory.

Common mistakes

• Signing the challan as if it were a GRN. The challan is the supplier's claim. Signing it "received" without a count converts the claim into your agreement.
• Letting the truck leave before the check. Weighment and count happen with the vehicle present; afterwards every discrepancy is unprovable.
• No quantity basis in the steel PO. The weighbridge-vs-section-weight argument, had it not been pre-agreed, is worth about Rs. 9,000 per delivery in the example above — and it recurs on every truck.
• Accepting substituted brands "for now". The GRN's brand column exists because "same rate, different brand" is a silent spec downgrade.
• GRN filled next morning from memory. A GRN written after the fact documents nothing.

Where this goes next

The GRN and stock register tell you what came in and where it was issued. The next lesson closes the loop: comparing what was issued against what the drawings say should have been consumed — and deciding whether the gap is normal wastage or leakage.