Definition
A letter telling customers to pay the factor instead of the business.
Why it matters
It's standard practice and rarely affects customer relationships.
Where it shows up in a deal
The NOA is a short letter sent to each approved customer at onboarding, telling them the receivables have been assigned and giving new remittance instructions. Their accounts payable team updates the vendor master, and from then on payment to anyone other than the funder does not discharge the obligation.
What it affects
- Under UCC 9-406 a notified account debtor that pays the wrong party can be required to pay again.
- Vendor master updates take time, so misdirected payments are common in the first weeks.
- Most agreements charge a fee for misdirected payments and require you to forward funds within a day or two.
- Anti-assignment language in a customer contract is largely ineffective against the assignment of accounts under Article 9.
The common mistake
Related terms
- VerificationThe process of confirming an invoice with the customer before funding.
- DebtorIn factoring, the customer who owes payment on the invoice.
- Invoice FactoringSelling unpaid invoices to a factor for an immediate advance.
- Confidential FactoringFactoring in which customers aren't notified and keep paying the business directly.
Questions about how notice of assignment affects your facility?
Call (929) 658-8087 or request a written quote — no obligation, no credit impact.
