As with any legal document, be sure to be fully aware of the language used within the Notice of Assignment. Take action immediately if you realize that any of your customers are not sending their payments on time. This transparency solidifies your factoring relationship, builds trust with your factor, and protects your interests. However, you may be responsible for additional penalties and fees if your customers continue to pay over notice, and you deposit those bookkeeping payments into your account.

• In a factoring relationship, you agree to assign your selected accounts receivables to the factoring company.
• This is important as it informs the customers that they must now pay the factoring company, not the original account holder.
• Since receivables are not physical goods, the NOA allows the factoring company to notify your customers that the financial rights to the invoice have been sold to them.
• Chances are, your customers are already aware of this financing method and how it works.
• The requirement for a Notice of Assignment comes from several legal principles and statutes, depending on the jurisdiction.
• If a customer sends payment to the original business instead of the factor, the payment is considered invalid under the terms of the NOA.

How to Include Payment Terms in an Invoice (With Examples)

The customer pays the invoice directly to the business, not the factor. The business then forwards the payment to the factoring company, after which the factor releases the remaining balance, minus any fees. Non-notification factoring allows the business to maintain control over its invoicing and collections processes. This can be beneficial for businesses that have established strong relationships with their customers and prefer to handle communications directly. If a client is slow to respond to the NOA or seems confused, the business should step in to help clarify any issues.

Disclosed Invoice Finance – Notifying Your Customer

Bankers Factoring provides the best service with 20 years of experience. We communicate well with our customers while protecting our client’s interests. Assignment companies send NOA to establish their Coffee Shop Accounting ownership and management position for your receivables. That’s because letting your customers know about the receivable assignment helps them make timely payments.

Who provides a notice of assignment?

The factor may revoke an NOA by sending a signed and notarized release notification to your customers. They will revoke an NOA if you decide not to factor an account any longer or if the factoring relationship has been terminated. An NOA can only be revoked if the account has no outstanding invoice balances. In some cases, the NOA may include language that deems continued use of your services to be consent to the terms of the NOA. The factor can, however, require your customers to sign and return a copy of the NOA to acknowledge receipt.

• This transfer can involve leases, intellectual property rights, loans, or other contractual rights.
• Factoring offers quicker access to cash, easier qualification, and doesn’t require collateral like traditional loans.
• A/R factoring is a type of business funding that injects working capital into companies with slow-paying customers.
• Suppose your client attempted to pay you via a check, void or shred the check and inform your customer to make the payment to the factoring company.
• Enforceability of a NOA is reliant on proof of receipt by the account debtor therefore, it is important to send the notice in a manner that provides proof of receipt by the account debtor.

Void the Payment

• Many of our factoring clients work with Fortune 500 companies who simply demand longer payment terms in order to do business.
• The factoring company typically sends the Notice of Assignment directly to your customer by email or certified mail to ensure legal acknowledgment.
• Instead of focusing on your business’s credit, factoring relies on your customers’ ability to pay.
• A Notice of Assignment (NOA) is a formal document informing your customers that their invoice has been sold to a factoring company.
• If the customer does not receive the notice, they may continue to make the payments to the business, leading to confusion, delayed payments to the factor and potential disputes.

However, if you prefer for your factoring to have a lower profile, you can opt for non-notification factoring instead. Invoice Factoring Guide can match invoice financing you with a factor offering your preferred method at no cost to you and with no obligation to retain their services. If you’d like to take the first step toward accelerating your cash flow, request a complimentary rate quote. In non-notification factoring, the business continues to handle its invoicing and collections as if the factoring arrangement doesn’t exist. The customers pay the invoices directly to the business, and the business then forwards the payment to the factoring company.