PR, PO, GRN — The Procure-to-Pay Process
PR (purchase requisition), PO (purchase order) and GRN (goods receipt note) are the three core documents of the procure-to-pay cycle. The PR is the internal request to buy, the PO is the binding order placed with a vendor, and the GRN records what was actually received — in that order. Together they create the trail that lets a company pay only for goods it ordered and received.
The Three Steps
1. Purchase Requisition (PR)
A PR is raised by the department that needs something — IT needs laptops, maintenance needs spares. It is an internal document: it commits nothing to any vendor and has no legal effect outside the company. Its job is to capture the need and route it through the approval chain so that spending is authorised before any order is placed.
2. Purchase Order (PO)
Once the PR is approved, procurement converts it into a PO — the formal order sent to a chosen vendor, listing items, quantities, agreed prices, taxes and delivery terms. When the vendor accepts it, the PO becomes a binding contract. This is the first document in the cycle that involves an outside party.
3. Goods Receipt Note (GRN)
When the goods arrive, the receiving or stores team inspects them and records a GRN — the quantity and condition actually received against the PO. The GRN is what confirms delivery happened, and in what measure, before any money moves.
How They Fit Together
| Document | Raised by | Purpose | Binding on vendor? |
|---|---|---|---|
| PR — Purchase Requisition | Requesting department | Authorise the need internally | No |
| PO — Purchase Order | Procurement | Place the order with the vendor | Yes, once accepted |
| GRN — Goods Receipt Note | Stores / receiving | Record what was received | No (internal record) |
After the GRN, the vendor's invoice is checked against the PO and the GRN in a step called three-way matching — the invoice is paid only if what is billed agrees with what was ordered and what was received. This is the control that prevents overpayment, duplicate billing, and payment for undelivered goods.
Frequently Asked Questions
What is the full form of PR, PO and GRN?
PR stands for Purchase Requisition, PO stands for Purchase Order, and GRN stands for Goods Receipt Note. They are the three core documents of the procure-to-pay (P2P) cycle.
What is the correct sequence of PR, PO and GRN?
PR first, then PO, then GRN. A department raises and approves a PR; procurement converts it into a PO sent to the vendor; when goods arrive, a GRN is recorded. The invoice is then matched against the PO and GRN before payment.
What is the difference between a PR and a PO?
A PR is an internal request to buy and creates no obligation to a vendor. A PO is the external order; once accepted it is a binding commitment. The PR is approved internally before the PO is issued.
Why is the GRN important?
It is the independent record that goods were actually received, and in what quantity and condition. In three-way matching the invoice is checked against the PO and the GRN, so the company pays only for what it ordered and received.