Goods received not invoiced accruals

A goods received not invoiced (GRNI) accrual records the cost of goods and services a business has already received at the year end but has not yet been billed for. The cost goes into the period in which the goods arrived or the service was used, with a matching liability in accruals, and the entry reverses when the supplier’s invoice is posted. The VAT on it cannot be reclaimed until a valid VAT invoice is held.

What does goods received not invoiced mean?

Most purchase systems match three documents before a supplier is paid: the purchase order, the goods received note (or a confirmation that a service was delivered) and the supplier invoice. At any moment some deliveries will have been booked in without an invoice yet arriving. Those items are the GRNI balance. In a business without a purchase order system the same thing happens informally: the builder has finished, the agency temp has worked the month, the stock is on the shelf, but nobody has billed.

GRNI is one type of accrued expense; time apportioned items such as utilities are covered in accruals and prepayments.

Why does the cost have to be recorded before the invoice arrives?

FRS 102 paragraph 2.48 requires financial statements, other than cash flow information, to be prepared on the accrual basis, so items are recognised when they meet the definitions of assets, liabilities, income and expenses rather than when cash moves or paperwork arrives. For small companies, Schedule 1 paragraph 14 of SI 2008/409 says all income and charges relating to the financial year must be taken into account without regard to the date of receipt or payment, and paragraph 13(b) says all liabilities which have arisen in respect of the year must be taken into account, including those that only become apparent between the balance sheet date and the date the accounts are signed.

Once goods have been delivered or a service performed, the business normally has an obligation to pay for them. The missing invoice changes the evidence, not the liability. Leaving the cost out overstates profit, and where the goods are still in stock the count will include items with no matching creditor. The link between purchase cut off and the stock count is explained in cut off at the year end.

How does a GRNI accrual work in practice?

1. Identify the items. Run a report of purchase orders with goods received but no matched invoice, or review delivery notes, timesheets and contractor confirmations dated on or before the year end.
2. Price them. Use the purchase order price, the agreed contract rate, the supplier’s price list or the invoice if it has arrived since the year end.
3. Post the accrual. Debit the relevant cost (or stock, or fixed assets for a capital item) and credit a GRNI or accruals account, net of recoverable VAT.
4. Reverse it. At the start of the new period the entry is reversed, or in an integrated system the GRNI line is cleared automatically when the invoice is matched. Either way the cost must not be counted twice.

In many packages booking in a delivery credits a GRNI control account and matching the invoice clears it. That balance should equal the list of unmatched deliveries, in the same way that a purchase ledger control account should equal the list of supplier balances (see ledger control accounts).

How do you value the accrual when there is no invoice?

The figure is a best estimate of what will be paid for what has been received, not for the whole order. If 60 of 100 units ordered have arrived, only the 60 are accrued. Partial delivery of services is handled the same way: a consultant who has completed two of four agreed workshops by the year end is accrued for two.

Information that arrives after the year end should be used. FRS 102 paragraph 32.5(c) lists the determination after the end of the reporting period of the cost of assets purchased before that date as an adjusting event. So if the invoice arrives in the first weeks of the new year, its amount replaces the estimate. Otherwise a purchase order or written quotation is good evidence.

A GRNI accrual is not a provision. HMRC’s Business Income Manual at BIM46510 notes that provisions are liabilities of uncertain timing or amount and are distinguished from trade payables and accruals. A GRNI accrual is usually certain in principle and close to certain in amount. On the balance sheet it sits in accruals, which the small company formats in Schedule 1 to SI 2008/409 show as accruals and deferred income, either as a separate item or within other creditors.

What does a worked example look like?

Illustration only. A VAT registered company has a year end of 31 March 2027. Three items are delivered before the year end with no invoice by that date.

Item	Evidence	Net amount	Debit
Raw materials delivered 28 March, still in stock	Purchase order and goods received note	£4,000	Purchases (and counted in closing stock)
Agency staff for the last two weeks of March	Approved timesheets at the agreed hourly rate	£2,500	Agency staff costs
New machine installed 30 March	Signed contract and installation sign off	£12,000	Plant and machinery (fixed assets)

The accrual at 31 March 2027 is £18,500, credited to accruals. The raw materials increase both purchases and closing stock, so they do not reduce profit until used, but they must be in creditors because they are in the stock count. The agency cost reduces profit. The machine is capitalised and depreciated from the date it is available for use. None of the VAT is reclaimed in the March VAT return; it is reclaimed once the invoices arrive.

How is VAT handled when the invoice has not arrived?

VAT Notice 700 paragraph 10.5 says input tax is normally claimed on the return for the period in which the supplier’s tax point occurred, but that you must also hold the evidence. Where you cannot claim in the normal period because you do not hold the necessary evidence, you claim on the return for the period in which you receive it. Section 19 of the notice explains that a VAT invoice is the usual evidence for claiming input tax and that, without one, the first step is to ask the supplier for it.

In practice the GRNI accrual is posted net of VAT where the VAT will be recoverable. If the business cannot recover the VAT, for example because it is not registered or the cost relates to exempt supplies, the accrual should include the irrecoverable VAT because that is part of the cost. Businesses on the VAT cash accounting scheme reclaim input tax when they pay the supplier, so the timing of the VAT claim follows payment rather than the invoice.

Is the accrued cost deductible for tax?

Generally yes, if it is revenue expenditure and the accrual is consistent with GAAP. HMRC’s guidance at BIM42201 says the treatment of a transaction in the accounts is followed for tax where it is consistent with GAAP, including the use of hindsight permitted by FRS 102 Section 32, and does not breach a specific statutory rule. BIM46555, written about provisions and other estimates, says HMRC expects the figure to be a reasonable judgement on the information available and should not substitute a different figure just because another view is possible.

Capital items in GRNI follow different rules. A fixed asset delivered before the year end is not deducted as an expense; it goes into the capital allowances computation. Section 5 of the Capital Allowances Act 2001 treats capital expenditure as incurred as soon as there is an unconditional obligation to pay it, with exceptions, including where payment is not required until more than four months after that obligation arises. So the date the machine was delivered and accepted, and the contract terms, decide which period the annual investment allowance or other allowance falls into. See capital vs revenue expenditure for the boundary.

Businesses using the cash basis do not accrue at all for income tax; costs are recorded when paid. The comparison is in cash basis vs accruals accounting.

How should the GRNI balance be reviewed?

• Age the balance. Items more than two or three months old usually mean an invoice was posted without being matched, a delivery was booked in twice, or goods were returned without the receipt being reversed.
• Check invoices received after the year end. Any invoice dated after the year end for goods received before it should either be in GRNI or explain why not.
• Agree to the stock count. Goods in the count with no invoice must appear in GRNI; goods in GRNI that are not in stock must have been used or sold.
• Keep the evidence. Company records must be kept for at least six years from the end of the last financial year they relate to, and delivery notes and orders are listed in GOV.UK guidance as part of the records of money spent.

What mistakes come up most often?

• Accruing the full purchase order value when only part of the order has been delivered.
• Reclaiming VAT on the accrual before the invoice is held.
• Forgetting to reverse the accrual, so the cost is charged in both years when the invoice is posted.
• Expensing a fixed asset that sits in GRNI instead of capitalising it.
• Including goods in the stock count without the matching creditor, which inflates profit by the cost of those goods.

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Related Accountapedia entries

• Reversing journals explained
• Accrued income and unbilled work
• The VAT control account
• The aged creditors report
• The year end stock journal
• Purchase invoice approval and three way matching

Sources

• Financial Reporting Council: FRS 102 September 2024 tmKYWO6
• legislation.gov.uk: SI 2008/409, schedule 1
• legislation.gov.uk: SI 2008/409, schedule 1
• GOV.UK: Manual page BIM46510
• legislation.gov.uk: SI 2008/409, schedule 1
• GOV.UK: Vat guide notice 700
• GOV.UK: Manual page BIM42201
• GOV.UK: Manual page BIM46555
• legislation.gov.uk: Act 2001 c. 2, section 5
• GOV.UK: Simpler income tax cash basis

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.