A receiving report is an internal business document that formally records the arrival of goods or services from a supplier. Generated by the receiving department when items are physically accepted, this document serves as official proof that a delivery was made. It also marks the transition of ownership of the goods from the vendor to the buyer.
What Information is on a Receiving Report?
A receiving report captures the necessary details about an incoming shipment to ensure clarity and accountability. The specific information can vary between companies, but certain elements are consistently present.
Purchase Order (PO) Number
The Purchase Order (PO) number is a unique identifier that links the delivery to a specific order placed with the supplier. This reference ensures that the goods being received correspond to a previously approved purchase and allows for easy cross-referencing.
Date and Time of Delivery
The report documents the exact date and time the goods were physically received. This information is important for tracking supplier lead times and maintaining an accurate timeline of inventory intake.
Supplier Name
The name of the vendor or company that supplied the goods is clearly identified on the report. This section includes the supplier’s name and sometimes their address for record-keeping and communication.
Item Description
A detailed list of the items received is a central part of the report. This description includes product names, model numbers, SKUs, and other specifications like size or color to confirm the correct items were delivered.
Quantity Received
The report specifies the exact number of units received for each item listed. This count is performed by receiving staff upon delivery to verify that the quantity delivered matches the quantity ordered.
Condition of Goods
A section of the report is dedicated to noting the condition of the items upon arrival. This includes documenting any visible damage, defects, or other issues with the products for resolving potential disputes.
Receiver’s Signature
The signature of the employee who received and inspected the goods is required on the document. This signature, along with the printed name of the receiver, serves as verification of the report’s accuracy.
The Purpose of a Receiving Report
Beyond simple verification, the report is a foundational document for inventory control. As soon as goods are officially received and documented, the data from the report is used to update the company’s inventory management system. This ensures that stock levels are accurately reflected, which helps in planning future purchases.
This document also serves as a trigger for the financial settlement part of the procurement cycle. The accounts payable department relies on the receiving report to confirm that the goods have been delivered before they process a supplier’s invoice for payment. It is an internal control mechanism that ensures the company only pays for what it has actually received.
How a Receiving Report is Used in Business Operations
In day-to-day business operations, the receiving report is a component of a verification system known as the “three-way match.” This process is used by the accounts payable department to ensure the validity of a supplier’s invoice before issuing payment. It involves comparing the information on three separate documents for consistency.
The process begins when the purchasing department issues a Purchase Order (PO) to a supplier, which details the items, quantities, and agreed-upon prices. This document represents the company’s official request for the purchase.
When the supplier delivers the goods, the company’s receiving department inspects the shipment and creates the receiving report. This report documents exactly what was delivered, including the specific items, their quantities, and any damages.
Subsequently, the supplier sends an invoice to the company’s accounts payable department requesting payment. The accounts payable team compares the details on the supplier’s invoice, the original purchase order, and the receiving report. Payment is only approved if the item descriptions, quantities, and prices align across all three documents.
The Importance of Accurate Receiving Reports
Maintaining accurate receiving reports directly impacts a company’s financial health and operational efficiency. Precise reporting ensures that a business only pays for the goods it has received in the correct quantity and acceptable condition. This verification prevents overpayments, such as being billed for items that were short-shipped or arrived damaged.
Accurate reports are also foundational to reliable inventory management. The data from these documents feeds directly into inventory systems, ensuring that records of on-hand stock are correct. This accuracy is important for financial reporting and enables better operational planning, preventing stockouts.
A disciplined receiving process also helps deter potential vendor fraud. By systematically verifying every shipment against a purchase order, a company creates a system of accountability that makes it difficult for fraudulent or duplicate invoices to go unnoticed.