Factoring Blog

What Is a Factoring Notice of Assignment?

Customers often ask if their factoring company will have to contact their customers. The short answer is yes – factoring companies will have to contact your customers as part of managing your account. Although few transactions require intensive contact, the transaction is not transparent to them. The first point of contact with your customer  is through a letter called a Notice of Assignment. Each factoring company has their own version but generally the letter serves as a platform to inform the customer that:

  • The factoring company is helping you manage your receivables
  • The factoring company has a right over the factored receivables
  • Invoices should be paid to the factor at a specified address
  • Other important matters (these vary)

Why does the finance company need to send this letter to your customer? Simply, because most  invoice factoring agreements stipulate that you are selling the financial rights to your invoices. The Notice of Assignment is how factoring financing companies notify your customers that the financial rights to the invoice have been sold.

Note: The Notice of Assignment and your factoring agreements are legal documents. You should have a competent attorney review them and explain them to you. This article is not intended as legal advice.

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