What is a Notice of Assignment in Trucking?
Trucking companies factor invoices every day. It’s a common practice in the industry to partner with a factoring company that provides cash flow so that truckers keep hauling the goods we need daily.
What is Factoring?
Factoring is the purchasing of account receivables (invoices) at a discount. The trucking company that enters into an agreement with the factor, sells its invoices for loads they hauled and then gets an advance payment (anywhere from 70-90%). The factoring company, in turn, collects payment for that invoice from the broker. Once the factoring company gets paid by the broker, it will take its factoring fee and remit the balance of the invoice to the trucking company.
A standard part of the factoring agreement is a notice of assignment (NOA) sent by the factoring company to the broker. Factoring companies usually send brokers one NOA at the beginning of their business partnership with the trucking company.
What is a Notice of Assignment in Trucking?
An NOA is a legal agreement that informs the accounts payable that a third party will receive payments, rather than the original owner of the invoice. In trucking, the NOA informs a broker of the trucking company’s relationship with the factor and instructs the broker to remit all payments to the factoring company instead of directly to the carrier that hauled their load.
If the broker pays anybody other than the factoring company without written consent, and that includes the carrier, it is then required by law to repay the amount of the invoice to the factoring company.
What is an NOA Release Letter?
When is there a need for an NOA release letter? An NOA release letter is sent by the factoring company to the broker when the business partnership between the factor and the carrier has been dissolved. NOA release letters are usually brief, and they may sometimes inform the broker of where to submit future invoice payments for that carrier. If a new address to remit invoice payments is available, the factor will provide it to the broker. Otherwise, it is strictly a notice of the terminated business relationship.
Check Out the Apex Factoring Guide
At Apex Capital, we pride ourselves in transparency with clients and brokers, who are our clients’ customers. If you have questions about factoring or would like more information, check out our free comprehensive factoring guide.
Finding the right factoring partner can be key to growing your trucking company. Apex factoring is here to help you manage your cash flow with a variety of valuable tools as well as excellent customer service and back-office support. Visit our website or give us a call at 855-369-2739.