What is the purpose of a goods receipt?

A goods receipt confirms the arrival of goods, updates inventory, and triggers financial and compliance processes.

What documents are required for goods receipt?

Common documents include purchase orders, delivery notes, invoices, packing lists, and inspection reports.

What happens if goods are damaged during receipt?

The goods receipt should be reversed or updated, and a return or claim process initiated with the supplier.

How can companies improve their goods receipt process?

By adopting ERP systems, using digital checklists, training staff, and automating approvals to reduce manual errors.

Is goods receipt legally required?

Yes. It serves as proof of delivery and is often required for financial audits, tax reporting, and regulatory compliance.

Goods Receipt Process and Best Practices

Learn how goods receipt works in SAP and warehouse systems, its workflow, challenges, and best practices to improve compliance, accuracy, and efficiency. 5 min read updated on September 17, 2025

Key Takeaways

A goods receipt records the physical movement of goods into inventory and ensures accuracy in purchasing, accounting, and supply chain management.
SAP allows multiple types of goods receipts: from purchase orders, production orders, deliveries, and others without reference.
The goods receipt workflow involves verifying deliveries against purchase orders, quality checks, and financial authorization before payment.
In Warehouse Management (WM) systems, the process can be automated with barcode scanning, transfer orders, and RF confirmation to reduce errors.
If goods are faulty, receipts must be reversed promptly to avoid incorrect payments.
An efficient goods receipt process reduces bottlenecks, prevents payment errors, ensures compliance, and strengthens supplier relationships.
Best practices include staff training, use of digital checklists, automated approval flows, and integration with ERP systems

Goods receipt refers to the physical movement of goods into the warehouse from external vendors. It always increases the stock of goods in your warehouse. You can plan and manage your goods receipts and monitor the stock of ordered and produced materials.

Types of Goods Receipts in SAP

Following are the different types of goods receipts in SAP:

Goods receipt pursuant to a purchase order
Goods receipt pursuant to a production order
Goods receipt pursuant to a delivery
Goods receipts without any reference (Other goods receipts)

Goods receipts made with reference to a purchase or a production order usually have all the information required for planning.

Purchase Order Goods Receipt

In the Materials Management (MM) module of SAP, goods are usually received with reference to a purchase order issued by the purchasing department. A purchase order is an important document for purchase monitoring and inventory management.

Production Order Goods receipt

In the Production Planning (PP) module of SAP, goods are usually received with reference to a production order. A production order documents the reason for producing a material. It is an important tool for planning and monitoring inventory.

Other Goods Receipt

If you are creating goods receipts without any purchase or production order, you can enter reserved quantities in order to plan goods receipts.

Common Documents Used in Goods Receipt

Several documents support the goods receipt process, ensuring proper recordkeeping and compliance:

Delivery Note – Lists the items supplied and serves as the first verification point against the purchase order.
Packing List – Details item quantities, weight, and packaging specifics.
Invoice – Confirms the financial obligation for received goods.
Inspection Report – Documents the quality check, noting acceptance or rejection.
Maintaining these records helps resolve disputes, ensures audit readiness, and strengthens internal controls.

The Goods Receipt Process in the WM System

The process of receiving goods in the warehouse through the Warehouse Management System is usually automatic. Warehouse Management (WM) system records all the transactions from the point of barcode scanning the container slip through placing the goods in the storage slots.

If carried out manually, the goods receipt process involves the following steps:

Initiate the goods receipt process in the WM by posting a goods receipt in the IM (Inventory Management).
As soon as you post in the IM, a quantity is assigned to a temporary storage bin and a transfer requirement is created.
The system then creates a transfer order.
The system uses a predetermined search technique to find a place for the goods and palletizes them.
Using the transfer order, the system transfers the goods from temporary storage bins to the warehouse storage bins.
A warehouse worker confirms the transfer of goods. This can be done manually or automatically with the help of an RF equipment.
Discrepancy between requested and transferred quantity, if any, is recorded in the WM, which is cleared in the IM component.

Best Practices for Goods Receipt Management

To optimize the goods receipt process and minimize errors, companies often adopt best practices such as:

Digitization of records through ERP or procurement software to reduce paperwork and human error.
Automated notifications and approvals to streamline communication between purchasing, warehouse, and finance.
Training warehouse staff in scanning and inspection protocols to ensure accurate data capture.
Regular audits of goods receipts to detect discrepancies early.
Standardized checklists for verifying supplier deliveries.

These practices not only improve efficiency but also enhance supplier accountability.

Transfer Order Without Posting in the IM

You can also begin the goods receipt process by creating a transfer order manually; you don't need any transfer requirement for this. You can then post the goods receipt in the IM.

The Goods Receipt Workflow

Goods receipt is basically the process of matching the received goods with the purchase order. It involves checking whether the goods are suitable for the purpose they were ordered and are in good condition.

An inefficient goods receipt process can cause a bottleneck in the manufacturing process. It can also result in errors like miscalculating a supplier's adherence to the delivery schedule.

Steps Involved in Goods Receipt

A purchase order is issued with a request for goods receipt.
When goods are received, the person receiving the goods inspects them for any likely damage.
If the packaging is good, the recipient forwards the goods to the department that ordered them.
If the department that ordered the goods is satisfied as to its suitability and condition, it raises a goods receipt with reference to the purchase order.
The finance department then pays the invoice for the received goods.

Challenges in Goods Receipt

While goods receipt is a standard process, businesses often face challenges such as:

Mismatched orders – Quantities received may not align with purchase orders.
Damaged goods – Shipments may arrive with defects or packaging issues.
Delayed processing – Bottlenecks occur if receipts are not posted promptly.
Manual errors – Paper-based processes can result in miscounts or missing entries.
Lack of visibility – Without integration into ERP systems, tracking supplier performance becomes difficult.

Addressing these issues requires automation, clear accountability, and timely updates across departments.

Goods Found to Be Faulty After Issuing Goods Receipt

If after having issued goods receipt, the goods are found to be faulty, the issued goods receipt should be reversed as soon as possible, so that the finance department or the people responsible for paying the invoice become aware of it.

The Benefits of Having an Efficient Goods Receipt Process

Although goods receipt sounds like a complicated process, software like SAP makes it extremely easy through electronic automation.

Having an efficient goods receipt process in place offers the following benefits:

You can track the time and place of receiving goods.
Suppliers do not have to wait longer for payment authorization.
It reduces the risk of authorizing payment for faulty and damaged goods.
It reduces the chances of received goods getting lost, stolen, or lying unused.
It facilitates the splitting of purchase orders and authorizing invoice payments for partial orders.

Compliance and Legal Importance of Goods Receipt

Beyond operational benefits, goods receipt also plays a critical role in legal and financial compliance.

It serves as evidence in audits and tax filings, confirming expenses tied to specific deliveries.
Properly maintained goods receipts help avoid duplicate payments and fraudulent supplier claims.
In industries with strict regulations, such as food and pharmaceuticals, goods receipts support traceability and safety compliance.
They can also be used in dispute resolution if suppliers contest delivery conditions or payment timelines.

Frequently Asked Questions

What is the purpose of a goods receipt?
A goods receipt confirms the arrival of goods, updates inventory, and triggers financial and compliance processes.
What documents are required for goods receipt?
Common documents include purchase orders, delivery notes, invoices, packing lists, and inspection reports.
What happens if goods are damaged during receipt?
The goods receipt should be reversed or updated, and a return or claim process initiated with the supplier.
How can companies improve their goods receipt process?
By adopting ERP systems, using digital checklists, training staff, and automating approvals to reduce manual errors.
Is goods receipt legally required?
Yes. It serves as proof of delivery and is often required for financial audits, tax reporting, and regulatory compliance.

If you need help with goods receipt, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.