Every factoring company works with a standard financial document called a Notice of Assignment, or NOA. The factoring company sends NOA letters to their clients’ customers to let them know new information about how their payments will be processed. It’s the first communication that a client’s customers will receive from a factoring company.

What is a Notice of Assignment?

Some new factoring clients might be curious about how their customers might respond to receiving these NOA letters, so let’s take a look at what the Notice of Assignment does. It tells your customers the following:

  1. The name of the factoring company you are working with
  2. The new payment address for sending checks (typically a bank)
  3. The fact that the factoring company has a financial right to these funds

The NOA letters are formal and legal documents that indicate that a business or individual has assigned debt, assets, or property to a third party. In this case, a business has assigned a particular asset, its invoices or accounts receivable, to a particular factoring company. Since the factoring company has purchased these invoices, the client’s customers make their payments directly to the factoring company.

What does a NOA letter mean to your customers?

Most customers have no reaction; they likely have a number of vendors who factor their invoices. With the popularity of factoring in today’s fast-changing economy, factoring is more and more common for businesses in many industries across North America. When the NOA letter is received, your customer’s accounting staff simply updates the mailing address for future checks for work you’ve completed after the date of the letter.
What is a Notice of Assignment
Factoring does send your customers the positive message that your company is going to have the financial resources needed to deliver the service or finish the job they need. The old thinking about factoring was that only companies in difficult financial situations sought factoring services. Today the message is just as likely that your company is solvent and poised for growth with improved cash flow.

When you choose to work with a factoring company, make sure you partner with a firm like Interstate Capital with experienced factoring specialists who will explain all aspects of the factoring process and ensure that you understand all documents, from the factoring agreement to the notice of assignment. Contact Interstate Capital, a leader in factoring since 1993, for a free cash flow assessment.