When a company runs a Perpetual Inventory Management System in Odoo one of the things that the accounting departments needs to do periodically is to reconcile the ‘Goods Received Not Invoiced’ (GRNI) Clearing Account. This account is also referred to as GR/IR or Invoice and Goods Recipt Reconciliaton Account.
The usual purchase process under Perpetual Inventory
In a transaction related to a Purchased product, when you receive the product, the following journal entry will occur for each received product.
- Dr. Inventory
- Cr. Goods Received Not Invoiced (GRNI)
When you enter the corresponding supplier invoice, the following entry is created:
- Cr. Accounts Payable
- Dr. Goods Received Not Invoiced (GRNI)
In this case we can say that the transaction associated to that Purchase Order & Product ended up correctly, and we can call it a Balanced Transaction (debit equals credit for that purchased product).
In normal circumstances the GRNI account will be balanced (debits equals credits).
The GRNI account will usually appear in the current liabilities section of the Balance Sheet, close to the creditors, since it represents much the same thing – it’s what the company owes someone for goods provided.
Identifying problems with the Goods Received Not Invoiced (GRNI) account
There are cases where there are issues in the transaction associated to a purchase product. Possible causes include:
- You have received the products, but not the supplier invoice yet.
- The supplier invoice has been entered, but the products have not been received.
- You have received the product, then returned them, and the supplier invoice was entered, but not the corresponding refund.
- An incorrect set-up of the perpetual inventory related accounts.
In the above cases the GRNI account will end up unbalanced, and then you’ll need to investigate what are the causes, an initiate the appropriate corrective actions.
When the company has a certain volume of transactions, getting to understand the causes of an unbalanced GRNI account can be very difficult if you cannot properly distinguish between which transactions ended up correctly and which ones did not.
That’s why you need a process to match (reconcile) the transactions associated to a purchased product that ended up correctly, so that you can quickly identify the unmatched (unreconciled) transactions and focus your attention on those.
At Eficent, and in close collaboration with the Odoo Community Association, we have implemented an improved process to help in this matching (reconciliation), making it possible for Odoo to automatically match the correct transactions for you, so that you can quickly identify the outstanding transactions and take the appropriate corrective actions.
The new process for Goods Received Not Invoiced (GRNI) reconciliation in Odoo
With the new process the Journal Item generated when a product is received into stock will now include a reference to the Purchase Order Line associated to the transaction.
Get trained now!
Contact us if you need further assistance to set-up your Perpetual Inventory Management system in Odoo using the new and improved Goods Received Not Invoiced reconciliation process.
The software that this new process relies on is free, and released under the AGPL license.