Factoring guide
What is a notice of assignment?
The short answer
A notice of assignment (NOA) is a letter telling your customer that you have sold your invoices for them to a factoring company, and that payment now goes to the factor instead of to you. With Smart Freight Funding, a customer receives one the first time you factor a load for them, and it stays in place for that customer until you ask us to release it.
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Why the NOA exists
When you factor an invoice, the factoring company buys it. The money your customer owes is now owed to the factor, but your customer has no way of knowing that unless someone tells them. The NOA is how they are told.
It is standard practice in trucking. Brokers and shippers receive notices of assignment all the time, and most have an accounts payable process built around them.
When your customer receives one
The first time you factor a load for a customer, we send that customer an NOA. From then on, every load for that customer is factored with us, which is why the notice covers the customer rather than a single invoice.
Customers you do not factor never receive one. You keep invoicing them yourself, exactly as before.
What it changes for your customer
Only where they send the payment. Their rate, their terms and their paperwork stay the same, and the cost of factoring is yours, not theirs.
The part that matters to them: once a valid notice of assignment is in place, paying you instead of the factor generally does not settle the debt. A customer who pays the wrong party can end up owing the invoice twice, which is why they take the notice seriously.
Getting an NOA released
If you want to bill a customer yourself again, ask us for an NOA release for that customer. Once it is released, the customer goes back to paying you directly.
Do not simply ask the customer to start paying you again. Until the release is issued, the notice is still in force, and a payment sent to you can leave the invoice open on our side.
What an NOA does not do
It is a notice to your customer, not a commitment from you.
- It does not sign you up to a contract term. There is none.
- It does not require you to factor your other customers.
- It does not set a minimum on how much you factor.
Common questions
Can I factor a customer without them receiving an NOA?
No. The notice is how your customer knows to pay the factor. Without it, they would keep paying you for an invoice they no longer owe you.
How long does a notice of assignment last?
Until it is released. With Smart Freight Funding, it covers that customer's loads from the first one you factor until you ask for an NOA release.
My customer paid me after getting the NOA. What now?
Call us straight away. It is almost always fixable when it is caught early, and much harder once the money has moved on.
Plain terms, in writing.
No contract, no monthly minimum, and you choose which customers to factor. The application takes a few minutes.