While the Goods receipt process is simply a means of matching the goods that a company receives with the Purchase Order and checking that the goods are fit for purpose and suitable in the sense that they are not damaged, the process can be a little intimidating as it’s one of the key processes of any business and controls the flow of materials (and in some part cost!) into an organization. It can often be one of the route causes of bottlenecks within manufacturing plants and can often cause inaccuracies in calculating supplier delivery schedule adherence – so for a small process it’s important to get it right!
How Does The Goods receipt Process Work?
The whole Goods Receipt Process starts with a Purchase Order. On the Purchase Order, there will be a request for a goods receipt. So when any goods are delivered to a business the person who receives the goods will look for any signs of damage. If the packaging looks fine then the recipient will forward the goods to the section or department who ordered the goods in the first place.
Once the section or department who placed the order received the goods, and if they are satisfied that the goods are indeed what was ordered and that they are in a good condition, then electronically they will raise a goods receipt against the purchase order.
The Finance Department can then pay an invoice because they will have a record that the goods have indeed been received.
What Happens If Goods Are Received And A Receipt Issued, But They Are Found To Be Faulty?
If goods are received but a goods receipt is issued before a full inspection has been made, or goods are subsequently found to be damaged or faulty, then a process of reversing the goods receipt can be undergone, so that the people who pay the invoices are aware that the goods were not satisfactory and that new goods are being waited for to replace the unsatisfactory goods.
The Benefits of Goods Receipt Process
Although it may sound complicated the process is actually very easy and straightforward, usually using a software application such as SAP, which stands for Systems, Applications and Products with regard to Data Processing. This application allows the whole process to be undertaken in a matter of minutes, rather than having to manually sort out whether or not the goods have actually been received and whether or not they were in an undamaged state.
Using an electronic system to map the receipt of goods is therefore a much speedier process than it used to be. This efficiency is not just good for the customer, who can track when and where goods were received, but it can reduce the length of time that suppliers have to wait to be paid, since the electronic system enables payment to be authorised as soon as the goods arrive.
It can also save companies money because there is a clear record of the goods received and their condition, so there is no longer a risk of paying for goods that were faulty or damaged.
The issuing of a goods receipt notice can also help received goods from going astray because someone has to issue the receipt and therefore takes responsibility for having received the goods.
The final benefit of this process is that it enables suppliers to be paid for partial orders, in the sense that the Purchase Order can be split into parts so they can have payment as each goods receipt is issued, which can be vital for companies in terms of ensuring that their cash flow is continuous.
So overall a ‘Goods Receipt Process’ is an excellent and very efficient way of ensuring that goods are ‘tracked’ and that payments are made only for goods that were received in a satisfactory condition, in a way that is cost efficient and beneficial not just to the customer who is receiving the goods, but also to the supplier.
