In the Record-to-Report (R2R) cycle, the GR/IR (Goods Receipt/Invoice Receipt) account serves as a critical checkpoint for ensuring that goods received match invoices processed. When this account is not monitored diligently, organisations can face accuracy issues in their financial statements. In this case study from a European entity, we explore a real-world situation where aged GR/IR items accumulated over time and impacted the reliability of reported financials. This case highlights how proactive account oversight, collaboration across teams, and disciplined reconciliations help maintain financial integrity.
The Situation: Growing Backlog of Unmatched GR/IR Items
During a routine review, the client controller noticed a large number of aged open GR/IR line items. These pending entries were affecting the Profit & Loss statement as well as the accuracy of the company’s balance sheet. The issue stemmed primarily from operational urgency – certain Purchase Order invoices were processed and paid as non-PO transactions due to missing Goods Receipt Notes. While this ensured timely payment to suppliers, it left unmatched entries in the GR/IR account. Over time, without consistent monitoring and follow-ups, these balances accumulated and created noise in financial reporting.
The challenge became more complex as many purchase orders had already been closed or fully utilised, yet the associated GR/IR entries remained open. Although the monetary value differences were minimal in many cases, the volume of items and ageing profile raised compliance and reporting concerns.
Our Remediation Approach: Cleaning Up the Past While Protecting the Future
To address the situation effectively, the team retrieved an updated GR/IR report and performed a detailed analysis across ageing buckets and purchase orders. A pragmatic and structured resolution plan was adopted. Negligible differences were cleared, and long-aged items tied to closed or executed purchase orders were written off in alignment with accounting policy. High-value and mid-aged entries received special attention, involving department heads and business teams to verify goods and invoice statuses. Communication played a key role—targeted emails were sent to PO owners requesting confirmation to validate pending items, ensuring clarity before clearing balances.
This exercise not only rectified historical issues but also strengthened cross-functional accountability between finance and procurement functions.
Strengthening Process Discipline to Prevent Recurrence
To ensure such situations do not arise again, preventive measures were established. Weekly reviews with the Procure-to-Pay leadership were scheduled to maintain ongoing visibility into open GR/IR line items. Clear invoice submission guidelines were created to improve accuracy at the source. Importantly, a dedicated initiative was launched with the procurement team to enhance supplier adherence to documentation and invoicing requirements, driving an end-to-end improvement across the procure-to-pay ecosystem.
These steps reflect the organisation’s shift toward proactive controls rather than reactive problem-solving, driving sustained accuracy in GR/IR accounting.
Right Path’s Perspective: Elevating Balance Sheet Integrity Through Collaboration
At Right Path, we believe that strong balance sheet governance is not achieved through tools alone – it requires collaboration, discipline, and shared accountability across business functions. This case demonstrates that effective GR/IR management is rooted in timely follow-ups, process clarity, and structured review mechanisms. When finance teams engage closely with procurement and business stakeholders, visibility improves, issues are resolved quickly, and financial statements reflect true organisational performance.
By embedding review rhythms, strengthening controls, and improving supplier compliance processes, organisations can maintain clean and reliable GR/IR balances – setting a strong foundation for accurate financial reporting and confident decision-making.
