notification of an assignment

What is a notice of assignment?

An assignment takes place when one party is holding a right to property, claims, bills, lease, etc., of another party and wishes to pass it along (or sell it) to a third party. As complicated as that sounds, it really isn’t. Strangely enough, many assignments can be made under the law without immediately informing, or obtaining the permission, of the personal obligated to perform under the contract. An example of this is when your mortgage is sold to another mortgage company. The original mortgage company may not inform you for several weeks, and they certainly aren’t going to ask your permission to make the sale.

If a person obligated to perform has received notice of the assignment and still insists on paying the initial assignor, the person will still be obligated to pay the new assignee according to the agreement. If the obligated party has not yet been informed of the assignment and pays the original note holder (assignor), the assignor is obligated to turn those funds over to the new assignee. But, what are the remedies if this doesn’t take place? Actually, the new assignee may find themselves in a difficult position if the assignor simply takes off with their funds or payment. They are limited to taking action against the person they bought the note from (assignor) and cannot hold the obligator liable. Therefore, it is important to remember that if any note or obligation is assigned to another party, each party should be well aware of their responsibilities in the transaction and uphold them according to the laws of their state. Assignment forms should be well thought out and written in a manner which prevents the failure of one party against another.

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What Is A Notice Of Assignment In The Trucking Industry?

To understand a notice of assignment, trucking company owners first have to be familiar with factoring—and to understand factoring, we’ll have to discuss the nuances of cash flow in the shipping industry.

Basically, the challenge for fleet owners (and owner-operators) is that their customers take forever to pay their invoices. You deliver a load and issue the invoice. The shipper may take 30 or 45 or 60 days—or more—to pay that invoice. Meanwhile, you’ve got fuel costs, payroll, insurance payments, and the thousand other financial obligations that keep your trucks on the road. You need that invoice paid now .

Factoring is the industry’s solution for quick payments to carriers. A factoring company steps in and pays your invoice today. Then that company collects from your customer, the shipper or broker who hired you to haul a given load. For their service, the factoring company keeps a low percentage of the total invoice value. (With Bobtail, the factoring fee ranges from 1.99% to 2.99%, depending on the volume of invoices you factor.)

Note that factoring is not a loan; the factoring company buys your invoices, so there’s no compounding interest or credit impact. Factoring beats loans as a cash-flow solution, hands down.

Struggling with slow payments from shippers and brokers? Keep cash flowing the simple way with Bobtail factoring.

With these preliminaries out of the way, we’re ready to answer the question that brought you here: What exactly is a notice of assignment in trucking?

Defining The Notice Of Assignment In Trucking

Factoring requires shippers and brokers to make changes in their billing systems. You’re no longer the collector on a factored invoice; the factoring company is. Accounts payable departments are busy places, and it’s easy for a shipper’s finance team to get confused when you do the work but another company collects the payment (after that company pays you, of course).

A notice of assignment clears up the billing relationship in a factoring agreement. A notice of assignment is a contractual document, supplied to both the carrier and the customer, that tells the customer to pay the factoring company, not the carrier.

The notice of assignment is an essential piece of paperwork, one of the documents you’ll have to keep on file as you establish a factoring relationship. You’ll have to sign the notice of assignment, and so will your customer. In short, this is a contractual agreement that carries legal consequences, and clarifies who exactly the shipper should pay for a delivered load.

Why is a notice of assignment important?

Consider the case of a trucking company that shifts to factoring after months or years of collecting directly from a shipper. That carrier’s payment details are already set up in the shipper’s accounting systems. Due to accidents or willful fraud, it’d be easy for the carrier to collect on an invoice twice—once from the factoring company and again from the customer.

In that scenario, the factoring company loses money, or at least becomes embroiled in a flurry of paperwork and legal challenges. So the notice of assignment is designed to protect the factoring company. But this document provides benefits for you, the carrier, and your customers, too.

How A Notice Of Assignment Benefits Shippers And Carriers

Who needs more paperwork? While it may seem like just another legal document, notices of assignment are actually helpful for all three parties involved in a factoring payment deal: the factoring company, sure, but also the carrier and the customer.

For shippers , the notice of assignment is a strong incentive to update payment details in their accounting systems. It delineates the nature of the financial agreement. It provides visibility and clarity that avoids conflict down the line. Most importantly, factoring companies require shippers to sign a notice of assignment—and factoring benefits customers, too. It keeps them from having to renegotiate payment terms, and gives them the full 30 or 60 days to pay, which allows them to optimize their own cash utilization.

Carriers also benefit from the clarity that comes with a notice of assignment. This document allows you to rest assured that the customer won’t accidentally pay you for a factored invoice, so you don’t have to spend all day trying to get the money into the right hands—or face collection threats of your own.

The binding agreement contained within a notice of assignment protects you from legal problems. It’s simply smart business to make sure everyone knows exactly who should get paid, and for what. Notices of assignment accomplish this goal—and, with Bobtail, the paperwork is simpler than you might think.

Simplifying Notices Of Assignment

Traditional factoring companies aren’t the most efficient financial operators in the world. They make you sign restrictive contracts. They might even tell you who you can work with, and who you can’t. They stack hidden fees on everything from set-up to ACH transfers to terminating the deal. And they make you fill out reams of paperwork before depositing a cent.

Bobtail is different every step of the way. We started this company to eliminate the inefficiencies in the factoring process, and that includes personalized assistance with handling notices of assignment.

When you sign up with Bobtail—a quick, online process involving a single application form—you’ll get a personal account manager who’s always ready to answer questions and solve problems. They’ll issue your notice of assignment and make sure your customers understand the document and why it’s necessary.

All you have to do is carry on carrying loads.

When you decide to factor an invoice, the process is even simpler. Just deliver the load, upload the invoice, attach a rate confirmation and a bill of lading, and get paid. It’s all done through Bobtail’s online system, so you can handle financing from the rig. We also provide a user-friendly digital dashboard that makes it easy to track every invoice at every step of the financing process. There’s simply no easier way to factor an invoice.

At Bobtail, we believe that you know what’s best for your business. That’s why we don’t make you sign a long-term contract; this is no-contract factoring. You pick which accounts to factor and which to collect from directly, and we don’t have volume requirements or exclusive financing deals.

We also don’t charge hidden fees. You just pay a flat factoring fee so there’s no confusion on exactly how much cash will hit your bank account—or when. Invoices are filled the same day you submit them, or the next day if the invoice arrives after 11 a.m. Eastern time.

Don’t be intimidated by a notice of assignment in trucking—or any other documents related to your factoring service. With Bobtail, our devoted customer service team makes sure everything runs smoothly, and we’re there to help every step of the way. Or, as one Trustpilot review puts it:

“They always answer the phone! The staff is very helpful and cordial. The three things I love are: Payments are on time, the website is easy to use, and great customer service!”

(Read more customer reviews on Trustpilot.)

Ready to improve cash flow without the headaches? Sign up to learn more today.

If you have questions about account set-up, notices of assignment, or anything else related to factoring, contact the Bobtail sales team at (410) 204-2084, or email us at [email protected].

Caroline Asiala is the Digital Marketing Manager at Bobtail. With a background rooted in advocating for migrant rights, Caroline leverages her expertise in content creation to support small trucking businesses, many of which are immigrant-owned and operated, with the information they need to make their businesses thrive.

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THE NOTICE OF ASSIGNMENT: A REFRESHER COURSE

Allen J. Heffner Nov 20, 2023

The Notice of Assignment is probably the single most important document for a Factor. Understanding what needs to be included in the Notice of Assignment, how to send it, and who to send it to can mean the difference between getting paid and not. Despite the fact that every Factor is (or should be) familiar with legal requirements relating to Notices of Assignment, we still find that many of our factoring clients who end up in litigation make basic mistakes relating to their Notices of Assignment. The article focuses on what information needs to be included in the Notice, who the Notice should be sent to, and how the Notice should be delivered.

What needs to be included in the Notice of Assignment?

To be effective, there is certain information that must be included in the Notice of Assignment. The Uniform Commercial Code (“UCC”) requires that the notice must:

• Notify the Account Debtor that the amount due or to become due has been assigned;
• Notify the Account Debtor that payment is to be made to the Factor;
• Reasonably identify the rights assigned; and
• Be signed by the Factor or its client.

The Notice of Assignment should also include a remittance address so the Account Debtor is informed how and in what manner the Factor should be paid.

Additionally, while not explicitly required under the current version of the UCC, Factors should include language in their Notice of Assignment that: (i) the Client has assigned all of its present and future accounts receivable to Factor; (ii) the Factor holds a first priority security interest in all of the client’s accounts receivable; and (iii) all payments owing to the client must be paid to the Factor.

Who should the Notice of Assignment be sent to?

Notices of Assignment should not be sent directly to individuals with an Account Debtor. Sending the Notice to a specific individual may lead to issues relating to the authority of that individual to receive documents on behalf of the Account Debtor. Moreover, Factors that direct Notices of Assignment directly to individuals open themselves up to arguments that the Notices of Assignment was not properly delivered. For instance, our clients that have sent Notices of Assignment to individuals have ended up in situations where the individual to whom the Notice of Assignment was addressed no longer worked with the Account Debtor or the individual was located at a different office and the Notice of Assignment was not sent to the proper location. To be safe and to avoid unnecessary issues, Factors should send the Notice of Assignment to the Account Debtor’s accounts payable department.

Additionally, some states have specialized definitions for what constitutes “notice” on behalf of a company. If there is any question as to where a Notice of Assignment should be sent, Factors should check with their attorney to determine where these should be sent.

How should the Notice of Assignment be delivered?

The crucial issue for the enforceability of a Notice of Assignment is proof of receipt by the Account Debtor, not proof of delivery. Therefore, it is good business practice to send the Notice of Assignment either certified mail or other method that provides for proof of delivery.

Many of our clients have asked about whether it is proper to deliver the Notice of Assignment via e-mail asking the Account Debtor to confirm receipt or with “read receipts” turned on. Some Factors prefer this method because it is more cost efficient.

While sending Notices of Assignment via e-mail is enforceable, we would not recommend it as a general business practice. Sending the Notice in this manner requires delivering the Notice to a specific individual, which we have discussed above can be problematic. Sometimes officers and directors of companies have assistants or other personnel manage their e-mail accounts, raising the possibility that the individual to whom the Notice was sent, never saw the e-mail, even though the e-mail was “read.”

Last, there is no requirement that the Notice be signed by the Account Debtor and returned to the Factor. Often, we see our client’s Notice include a “confirmation of receipt” line for the Account Debtor to sign and return. Sometimes, the Factor will have proof of delivery to the Account Debtor but the Notice was not signed and returned by the Account Debtor. This adds unnecessary ambiguity as to whether the Notice was actually received by the Account Debtor. Therefore, we instruct our clients not to include such requests for proof of receipt.

Who should send the Notice of Assignment?

Some of our clients that have had bad experiences with Account Debtors after delivering a Notice of Assignment have chosen to have their Client be the one to deliver the Notice of Assignment. There is no legal requirement as to whether the Factor or the Client is the correct party to deliver the Notice of Assignment. However, we recommend the Factor be the one to deliver the Notice of Assignment. This way, the Factor is in complete control of the contents of the Notice of Assignment, how it is delivered, and receives confirmation of its delivery. We have been in situations in which the Factor allowed the Client to deliver the Notice of Assignment, but the Client did not deliver the Notice of Assignment in accordance with the law, leading to avoidable litigation.

Should a Factor respond to an Account Debtors questions regarding a Notice of Assignment?

Absolutely, yes. If requested by an Account Debtor, pursuant to the UCC, a Factor must furnish reasonable proof of the assignment for the Notice of Assignment to be valid. Too often we see situations in which requests are made or questions are posed by Account Debtors that the Factor ignores, thinking that because the Account Debtor received the Notice of Assignment, nothing else needs to be done. The Factor should respond to the Account Debtor and provide reasonable proof of the assignment. These communications can also provide invaluable insight as to the relationship between the client and the Account Debtor, how and when payments will be made, and can provide the Account Debtor a sense of trust with the Factor.

A Notice of Assignment is crucial for Factors because it provides legal protection, establishes priority of interest, prevents confusion, facilitates legal recourse, and enables effective communication with Account Debtors. Without this notice, Factors may encounter difficulties in asserting their rights and collecting payments from Account Debtors, potentially jeopardizing the financial transaction.

Bruce Loren and Allen Heffner of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. For over 25 years, Mr. Loren has focused his practice on construction law and factoring law.  Mr. Loren has achieved the title of “Certified in Construction Law” by the Florida Bar. The Firm represents factoring companies in a wide range of industries, including construction, regarding all aspects of litigation and dispute resolution. Mr. Loren and Mr. Heffner can be reached at [email protected] or [email protected] or 561-615-5701

Bruce E. Loren · Michael I. Kean · Allen J. Heffner · Kyle W. Ohlenschlaeger · Frank Sardinha, III

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What is a Notice of Assignment?

• Ultimate Invoice Factoring Guide
• What is a Notice of…

A factoring contract can contain many parts, but few are as important as the Notice of Assignment.

What are the parts of a notice of assignment.

A notice of assignment contains a few standard parts. First, it informs your customers that you are factoring your invoices and that your factoring company has been assigned as the payee for your accounts receivables. Next, a notice of assignment provides your customer with an updated remittance address for all current and future payments to be sent to. Third, it contains explicit instructions that all payments should be made to the factoring company’s remittance address only, and that no other payments should be made to any other address without explicit permission from the factoring company. It also contains verbiage that states that payments made in conflict to this notice of assignment will not be considered to have discharged a customer’s obligation for payment to the factoring company. Lastly, the factoring client signs the notice of assignment to prove it is valid.

Why do my customers need to know that I’m factoring?

The right to receive payments for amounts owed is one of the main protections a factoring company has in the factoring process. It is an essential part of almost every factoring program. In order to assure that payments are directed appropriately, a factoring company must contact a customer to verify that the notice of assignment has been accepted and the remittance address has been updated.

Why does my factoring company receive payments for invoices that weren’t factored?

A notice of assignment gives your factoring company the right to collect for ALL payments owed to you by your customer. Some factoring companies require that you factor every invoice for your customers, making this a non-issue. However, if you are working with a factoring company that allows you to pick and choose which invoices to factor for a customer, your factoring company will also receive payments for those unfactored invoices.

This happens for two reasons. First, allowing multiple remittance addresses for a payee exponentially increases the chance of a misdirected payment being made. Second, asking the customer to shoulder the additional workload of keeping track of which payments should be made to which remittance address would make invoice factoring unattractive for many customers, and thus limit the number of companies willing to work with a business that was factoring. All factoring companies have policies to efficiently deal with unfactored payments when they arrive.

What happens if I receive a payment that should have been sent to my factoring company?

Most factoring companies understand that accidents happen, and mistakes will be made. If an error in payment occurs in good faith, factoring companies have processes in place to deal with the issue. Firstly, it is important that a factoring client does not deposit the payment into their account, but rather they should immediately notify their factoring company of the errant payment and send it immediately to their factoring company. If a factoring client fails to do so, or attempts to hide the payment from their factoring company, then that client will be responsible for a misdirected payment, which often carries heavy penalties in the factoring contract.

When you assign your receivables to a factoring company in the trucking industry, you agree that your client payments go directly to the factor. The factor ensures that you are paid for each freight you deliver and on signing, they send your clients a notice of assessment (NOA).

The NOA document is basically the letter a factoring company sends to its customers. It informs them that the accounts receivable are assigned and how they can make future payments by directing them to the factoring company. As receivables are not tangible goods, a notice of assignment is how factoring companies can claim financial rights to the invoices you sell to them. 

Exploring the Basics of Notice of Assignment 

When you  sign up with a factoring company  to streamline payment for your freight services, they send out NOAs to protect themselves, ensuring they receive payments from your clients. There is specific information that needs to be included in an NOA to solidify the agreement. According to  the Uniform Commercial Code  (UCC), the notice must follow these rules:

• It must have the factoring company or client’s signature.
• It must advise the account debtors, the customer, of the outstanding amount now assigned to the factoring company.
• It must confirm that the payment is to be made to the factoring company directly.
• It must include remittance details to inform the debtor how to make payment.

As such, the NOA offers you the following benefits:

• No more waiting for payments — the factoring company will take on remittance.
• The NOA helps to ensure there are no misdirected payments, allowing you to access working capital immediately.
• You can bypass the need for lines of credit when clients fail to pay on time.
• As this letter makes the factoring transaction official, you can focus on your business’s core operations instead of working to collect payment from clients.
• The NOA keeps your customers updated, so you need only focus on general relationship management.

The Significance of NOAs Across Industries

Sending out this legal notification to your client is vital, especially in industries like trucking, where invoice factoring is common practice. It can impact your business and professional relationships in the following ways:

• Avoiding payment disputes:  With clear communication through NOAs, your business can prevent payment disputes or misunderstandings.
• Industry-standard compliance:  Cash flow management is crucial for operations in industries like trucking. Sending NOAs helps your business align with industry standards and best practices, demonstrating your commitment to responsible business practices and financial transparency.
• Legal and contractual compliance:  The NOA formalizes your clients’ notification of invoice factoring, aligning with legal and contractual obligations.
• Maintains trust and relationships:  Proactively sending NOAs demonstrates your professionalism and honesty, helping to keep the trust you are building with your clients. 
• Smooth cash flow:  Sending NOAs helps the factoring process run smoothly which leads to timely funding.
• Transparency and communication:  NOAs allow you to be transparent about your financial operations and let clients know how their invoices are managed. 

Navigating the Challenges and Opportunities of NOAs

The primary concern about switching to invoice factoring is about what your clients will think. They may be unfamiliar with this practice, making it essential to reassure them that this is common practice for small and midsize organizations through direct communication. 

In fact,  37% of small businesses outsource  some business processes. Ensure that they understand the benefits of this service, like extended payment terms. Finally, reassure your clients that nothing changes in terms of the service they have come to know and trust from your company. 

Answering Common Questions About Factoring and Invoice Factoring

Now that you understand the NOA role, how do you feel about signing up for freight factoring? Here are  some frequently asked questions  we get about this service and how freight brokers or owner-operators will benefit:

• What is freight factoring?  With freight factoring, truckers get their payment for work they have done immediately. The freight billing company purchases the trucking company’s invoices to ensure that these are paid as soon as possible.
• Is invoice factoring a reliable service?  Factoring services in the United States will enjoy a  compound annual growth rate of 8.1%  between 2022 and 2023, showing that these services are common and here to stay.
• What is better, freight factoring or a bank loan?  Freight factoring ensures that you get cash without going into debt. Taking on a bank loan may stop you from getting another loan for equipment you need or extra trucks as it can indicate credit troubles in your organization. 
• How are my customers paying their invoices?  The factoring company pays you for each invoice you issue and they make up their money when your clients pay them directly.
• What if my company received a payment that the factoring company should have gotten?  You assign all of your invoices to the factoring company, but if you receive a payment in error, do not deposit the money into your bank account. Notify your factoring company and send it their way immediately. Follow this up with another NOA to ensure the client knows how to proceed moving forward.

Understanding How FactorLoads Can Help

FactorLoads offers freight invoicing to help improve your trucking business cash flow. Aside from sending out these NOAs, our services include:

• Freight factoring:  Our services ensure you have accessible cash flow, which you can redirect to other areas of your business. No more waiting for money that is due to you.
• Recourse and non-recourse:  We pay upfront when you submit bills, but note that this service comes at a higher cost.
• Spot factoring:  With this flexibility, you take control over your finances by choosing when and with which clients you want to implement factoring. 

Leveraging NOAs for Business Growth With FactorLoads

The NOA paperwork is vital to your organization’s paperwork as it informs clients of the change in invoice ownership, reflecting the information they need to make payments accordingly.

FactorLoads is a freight factoring company that understands the pressure you are under while waiting for load payments. We have years of experience helping companies like yours get their cash the right way. We don’t require contracts and have no hidden fees. You get 24/7 full factoring services so you can access your money as soon as a client is approved. 

Let us take the pressure of invoice remittance off you —  contact us today  to discuss your business needs and start saving money while you improve your daily operations.

13 February 2023

Notice of Assignment in Factoring in the U.S

When a business uses invoice factoring, they transfer ownership of its accounts receivable to a factoring company, which then has the responsibility to collect payment for those invoices.

Therefore, a document is issued to alert its customers of this. This is known as a notice of assignment.

Meaning of Notice of Assignment

A notice of assignment is a document that notifies clients that a factoring company has acquired ownership of their accounts receivable, or invoices, from the original business.

The notice's objective is to alert customers to the ownership change and specify who should receive payments.

Importance of Notice of Assignment

A notice of assignment is vital because it officially notifies customers that the ownership of an invoice has changed hands and that they should now direct payments to the factoring company.

The notice helps ensure that payments are sent to the appropriate parties , avoiding misunderstandings and potential conflicts and preventing uncertainty.

In the event of a disagreement, having a detailed and official notice of assignment can safeguard the legal interests of both the company and the factoring company.

Impact of Notice of Assignment on Businesses

The possible impacts faced by businesses by using a factoring company and sending their customers a notice of assignment are:

1. Enhanced customer relationships: By providing clear and official notification to customers of the change in ownership of invoices, a business can help maintain and strengthen its relationship with them.

2. Improved cash flow: By transferring ownership of invoices to a factoring company, a business can receive payment more quickly and improve its overall cash flow.

3. Increased operational efficiency: By using a factoring company to manage the collections process, a business can free up internal resources and focus on its core operations, leading to increased efficiency.

4. Reduced risk: By transferring the responsibility of collecting payment to a factoring company, a business can reduce its exposure to the risk of non-payment and bad debt.

However, before deciding to utilize factoring , it's crucial to consider any potential drawbacks, such as losing control over the collection process and the expense of the factoring service.

Factors Covered in a Notice of Assignment The main sections covered are:

• The company's accounts receivable have been transferred to a third-party financial institution, and payment should now be made to them
• The customer should now send payments to a new address, typically a secure payment processing location
• The customer will be responsible if they make a payment to the wrong address

Information in a Notice of Assignment

In a factoring notice of assignment, the following details are covered to notify the business’ customer about the transfer of ownership of accounts receivable:

• Particulars of the accounts receivable being assigned , including the amount and invoice numbers
• Details of the factor and the client/debtor
• Specifics of the assignment of the accounts receivable, including the effective date and any conditions of the assignment
• Instructions for the customer on how to direct future payments to the factor
• Any other relevant terms and conditions of the factoring agreement

What Happens When an Obligor Doesn’t Receive Notice of Agreement

A business that sells its accounts receivables (invoices) to a third-party factor must send a notice of agreement to its customers.

The purpose of the notice is to inform the customer that the factor has taken ownership of the invoice, and the payments should be made directly to the factor instead of the business.

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.

In some cases, the customer may have the right to demand a return of the payment made to the factor or stop payment if the notice of assignment was not correctly given.

How to Receive Notice of Agreement

A factoring notice of agreement is typically provided by the factoring company or third-party factor that has purchased the accounts receivable (invoices) from the business.

The notice is usually generated by the factor and given to the business to send to its customers.

The business may also be responsible for ensuring that the notice of assignment is delivered correctly to its customers.

Some factoring companies provide templates or sample notices that the business can use.

Requirements for a Notice of Assignment

To obtain a notice of assignment (NOA) from a factoring company, the following requirements are necessary:

• Monthly revenue of at least $300,000
• A stable financial track record of 1-2 years
• Accurate and trustworthy financial reports
• Effective management of accounts receivable
• No significant financial difficulties

1. Who Sends a Factoring Notice of Assignment? A factoring notice of assignment is typically sent by the business that has sold its accounts receivables or invoices to a third-party factor or factoring company.

The factor usually provides the notice of assignment, and the business may have to sign a factoring agreement with the factor to obtain the notice.

The notice informs the business’ customers that the factor has taken over the ownership of the invoices, and the payments should be made directly to the factoring company instead of the business.

2. How Much Does a Notice of Assignment Cost? The cost for issuing a notice of assignment in factor can differ based on various elements, such as the amount assigned, the state where the assignment is taking place and the particular provisions of the assignment agreement.

This cost may include legal fees, filing paperwork fees and other administrative expenses. It's crucial to examine the assignment agreement thoroughly to determine the precise cost and be aware of any additional fees that may be incurred.

3. How Long Does a Notice of Assignment Take? The duration of issuing a notice of assignment in factoring can differ based on particular circumstances. Usually, the process can take anywhere between a few days to weeks.

The length of the time may be influenced by factors such as the state in which the assignment is getting issued, the complexity of the assignment agreement and the accessibility of relevant parties.

Moreover, the time needed for the notice of assignment may be affected by any legal challenges or hindrances.

4. Does Notice of Assessment Mean You Owe Money? In the United States, a notice of assessment usually implies that you owe money to the government.

However, it is contingent on particular circumstances. The Internal Revenue Service (IRS) sends out the notice of assessment to inform taxpayers of any modification to their tax obligations.

If the notice displays an increase in the amount owed, it implies that the taxpayer has an outstanding balance with the IRS and should pay it promptly to prevent further interest and penalties.

On the other hand, if it shows a decrease in the amount owed, it showcases that the taxpayer has paid more taxes than required and may be eligible for a refund.

It is, therefore, always advisable to thoroughly examine the notice and to get help from a professional.

5. Is Notice of Agreement a Proof of Debt? A notice of agreement alone is not considered proof of a debt. The document merely outlines the terms and conditions agreed upon by the parties involved.

It is not enough evidence to confirm the presence of debt but rather serves as a record of the agreement between the parties.

To establish proof of debt, other financial documents such as receipts, invoices or other documentation may be necessary.

The specific requirements for proving a debt depend upon the type of debt and the laws of the jurisdiction where it is being established.

6. What is a Letter of Release? A letter of release from a factoring company is a declaration that a debt has been satisfied and is no longer the company's responsibility.

In factoring, a business sells its accounts receivable to a factoring company for a fee to receive cash quickly.

Upon receiving the payment on the accounts receivable by the business’ customer, the factoring company issues a letter of release, confirming that the debt has been fully paid off and the company is no longer obligated to it.

The letter serves as proof that the debt has been fully resolved. It can be used to clear the debt from the business's financial records.

The specifics of the letter of release, including the terms and conditions, will depend on the particular factoring agreement and the laws in the jurisdiction where it is formed and drafted.

Siddhi Parekh

Finance manager at drip capital.

Table of Content

• Information in a NOA
• What Happens When an Obligor Doesn’t Receive NOA
• How to Receive NOA
• Requirements for NOA

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Notice of assignment in invoice factoring

Many businesses that are underserved by banks - such as startups and those engaged in international trade - are turning to alternative funding solutions, such as invoice factoring, to access liquid capital, reaping the rewards in speed, efficiency, and simplicity. However, each of these financial services includes documentation to ensure a smooth process and to avoid relationships or contracts breaking down. For example, in an invoice factoring agreement, the finance provider must issue a 'notice of assignment'.

In this guide, Stenn explains what a notice of assignment is and its role in an invoice factoring agreement.

What is a notice of assignment (NOA)?

A notice of assignment is issued in an invoice factoring agreement - in which an intermediary provider buys a company's accounts receivable and assumes responsibility for chasing payment from the debtors.

In this agreement, the factoring company must advise each debtor that it has taken ownership of the right to collection.

A notice of assignment (NOA) is the legal document presented to the owing party, proving that the invoice factoring company is eligible to assume ownership of debts owed to their client. It's a legal agreement that informs accounts payable that a third party will receive invoice payments instead of the original invoice owner.

What is included in an NOA?

A notice of assignment (NOA) is a legal document that must be drafted in a certain format, with several key elements that must be included. These are essential in providing the terms, contract information and stipulations of the debts being bought:

• Proof of Assignment: All notices of assignment must include proof of debt ownership. This must include a warning that accounts payable shall now be directed to a third party, who that third party is and the accounts that need to be paid.
• Address: The notice of assignment must include a new payment address associated with the factoring provider.
• Liability Warning: An explanation and warning of the parameters for customer liability in the event of a misdirected payment and the repercussions for missed payments.

Why is an NOA important in factoring?

A notice of assignment is important in factoring as it gives the debtor a clear outline of whom further payments will be sent to, and the third party now involved in taking over debt liability.

It also provides a factoring company with proof that they now have ownership over those liabilities. This allows for smooth and effective cross-party communication and outlines the responsibilities of both parties in binding legal terms.

This represents an important part of the invoice factoring process - as the exporter signs over ownership of its invoice, allowing it to continue offering attractive delayed payment terms to importers without risking bad debt or being unable to meet its own accounts payable obligations. The importer simply has to amend payment details when paying the invoice, with no further obligations or expectations.

Plus, an NOA is one of only two documents that a client needs to sign to qualify for invoice factoring with Stenn - and this process is fully online, making it easy to apply in just minutes.  

For more information on invoice factoring and the process of applying for finance with Stenn, check out our helpful video .

How will it affect business?

When a notice of assignment has been issued, the invoice factoring company takes control of the debts as a third party, and the previous owner of those debts receives an advance on owed payments quickly.

The significant consideration for any company accessing invoice factoring - and therefore notice of assignment - is the fees associated with the service. Invoice factoring providers buy customer invoices at a slight discount, meaning the client doesn't receive the full invoice amount owed.

No major aspects of the debt change for the owing party, which simply amends the company to which it submits full payment of its accounts payable. However, some stipulations of mispayments may change as may the terms by which repayments can be enforced.

This includes the supplier-buyer relationship, which remains unchanged. Invoice factoring services simply allow the buyer to enjoy longer payment terms while the supplier gets immediate access to liquid capital, which it can invest in improving its offering long-term.

Access invoice factoring with Stenn

Are you engaged in overseas trade with delayed payment terms? Do you need a liquid capital injection to help cover your own accounts payable in the short term or to fund business growth? Simply submit your unpaid invoices for an instant working capital boost.

Stenn finances invoices for hundreds of small and medium-sized importers and exporters with manageable payment terms. And we only require two documents to be signed to qualify for funding, so we don't need to see your credit score.

Apply for financing with Stenn today or find out about the other financing options available to your business in our Resource Hub - including guides to:

• Invoice financing
• Revenue-based financing
• Stock financing
• Business Lines lines of credit
• Alternative lending options for e-commerce businesses

  About the Authors

This article is authored by the Stenn research team and is part of our educational series.

Stenn is the largest and  fastest-growing online platform  for financing small and medium-sized businesses engaged in international trade. It is based in London, provides financing services in 74 countries and is backed by financial giants like  HSBC ,  Barclays ,  Natixis  and many others.

Stenn provides liquid cash to SMEs within the global financial system. On stenn.com you can apply online for  financing and trade credit protection  from  $10 000 to $10 million (USD) . Only  two documents  are required.  No collateral  is needed and  funds are transferred within 48 hours  of approval.

Check the  financing limit available on your deal  or go straight to Stenn's  easy online application form .

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Disclaimer : The above article has been prepared on the basis of Stenn's understanding of the subject. It is for information only and doesn't constitute advice or recommendation. Whilst every care has been taken in preparing this article, we cannot guarantee that inaccuracies will not occur. Stenn International Ltd. will not be held responsible for any loss, damage or inconvenience caused as a result of anything published above. All those applying for credit should seek professional advice when doing so.

About Stenn

Since 2016, Stenn has powered over $20 billion in financed assets, supported by trusted partners, including Citi Bank, HSBC, and Natixis. Our team of experts specializes in generating agile, tailored financing solutions that help you do business on your terms.

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