Materials Receipt and Accounting


Materials required for manufacturing process to run are received from various sources from outside which are verified and accounted for in the Stores.

Different modes of receipt :

Materials required are received from various sources through various modes of transportation. The major mode of transportation are Rail and Road. Other than this the materials are received through air, sea , courier, registered post or by hand also (Door delivery).

By Rail:

The bulky material required in huge quantity like Raw materials are received by Rail in rake load. A rake is the multiple number of wagons received together. In such cases the whole rake is received inside the plants and the wagons are returned back to railways after unloading. When the quantity received is less than a rake load, materials are received in wagons which are transferred inside the plant by the Railways and empty wagons are returned to railways after unloading. The consignments received in rake load or wagon load are accompanied by the carrier’s( Railways) document called Railway receipt (RR). The wagons / rakes are to be unloaded within the stipulated time limit given by the Railways known as Free Time. For any delay in releasing the wagons beyond the free time Railways charge extra amount based on the extra time the wagons are held, known as “ Demurrage”.
Material less than a wagon load are received in smaller consignments also known as “Smalls”. The railway documents accompanying such small consignment is also know as Parcel Way Bill (PWB). These small consignments/ Parcels are received from the railways from their godown within the stipulated time. For any delay in collection of such material from Railway godown Railways charge extra amount known as ‘warfage’.

By Road:

The materials are also received through the Road transportation by trucks. The
material received by truck are accompanied by a transporters document know as consignment note. Depending on the terms of the Purchase Orders, the material by road are received in the Plant Stores or in the transporters local godown in which case Stores collects the material from the transportation godown.

The materials sourced from the foreign countries are received by Ship or through Air Carrier up to the nearest Sea port/ Airport respectively which is further transported to Plants by Road.

Verification of Consignments :

When the materials are received by Rail the wagons received are verified for any pilferage / shortage and also weighed for ascertaining the receipt of correct quantity. Any discrepancy in the quantity found or the damages observed is recorded on the RR / PWB. A Railway claim is lodged against this discrepancy. This Railway claims become a prerequisite for lodging insurance claim with underwriters.
The material received through trucks are verified at the point of receipt for the correctness against our Purchase order and the suppliers challan and outward damages or shortages in quantity if any. If any shortage or outward damage in the received material/consignment is observed the remarks is made on the transporters document and a carrier claim is lodged.
Acknowledgement for the receipt of consignment/material was given on the transporters document like consignment note or on the delivery challan of the firm.

Receipt, Accounting & Documentation :

Once the consignments/materials are received in the Stores from the transporters/railways, actual quantity received & the condition of the material received are further checked in detail after unpacking the packages and matching the quantities with the suppliers delivery challan and the Purchase orders. Weighment is resorted to wherever the weight is to be ascertained.
The correctness/completeness and the quality of material received is checked as per the terms of Purchase Orders. Then the document for receipt accounting is prepared which is known as “Goods receipt note (GRN)” or “Stores Receipt Voucher (SRV)”. GRN/ SRV is the document through which the received materials are taken on charge in the plant, also the document which communicates the acceptance/rejection of the material supplied and a document enabling the payment to the supplier against the supply.

Direct delivery to users or central storages :

The materials against the various Purchase Orders are generally received centrally by stores and stored after verification and accounting. However in case of certain items where there is no central facility of storage in the Stores the material is directly transferred to the storage facility available with the user departments. After ascertaining the quantity and the quality of such materials received at the user departments and their certification the material receipt is accounted for by raising GRN/SRV.

Excise documentation :

Against most of the materials we procure from the suppliers we reimburse excise duty/Central VAT (CenVAT) and State VAT (Value added tax) paid by the suppliers. The corresponding CenVAT gatepass VAT document is sent by the supplier along with the materials. For the materials used in the direct production or enabling production, we get CenVAT/ VAT credit benefit from the concerned Government. For claiming this CenVAT/ VAT benefit from the Govt. Authority the CenVat document (Excise Gate pass) and Vat documents received along with the consignment are required. Therefore the receipt of these documents are particularly ensured and transferred to Accounts in time to claim the CenVAT/ VAT credit. In case of not reciving these documents the same is recorded on the suppliers challan & the supplier is not reimbursed these charges as per Purchase Order stipulations.

Lead time of Receipt accounting :

The material received from various sources are verified and accounted




for in the Stores only after which the materials can be made available for the use by the user department and the payment to the supplier can be made or regularised. So, the timely accounting of the receipt of the material is very important.. The time taken in accounting & taking the material on charge from the time it is received in Stores is known as “Lead time of Receipt accounting” or “GRN/SRV lead time” . Every plant tries to make this GRN/SRV lead time as minimum as possible to ensure timely accountal of material, availability of received material for use and the timely payment/ regularization of payment to the suppliers.

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