If you’re in the trucking business, factoring is a common practice. It’s a financial tool that keeps your cash flowing, so you can keep hauling loads without waiting months for brokers to pay. A key part of this process is the Notice of Assignment (NOA). But what exactly is it, and why does it matter to you?
What is an NOA in Trucking and Why Is It Important?
A Notice of Assignment (NOA) tells brokers that a factoring company now owns the right to receive payment for a trucking company’s invoices. This legal document states that instead of paying the carrier directly, the broker must send payment to the factoring company.
Factoring companies send an assignment notice to brokers when they start working with a trucking company. This helps payments go to the right place, keeping cash flow steady for truckers and reducing financial risk.
If a broker ignores an assignment letter and pays the trucking company directly, they might have to pay the invoice twice — once to the carrier and then again to the factoring company. That’s why NOAs are a big deal in the industry.
How Does Factoring Work for Trucking Companies?
Factoring means selling unpaid invoices to a factoring company at a discount. This process is also called assigning accounts receivable. Here’s how it works:
- Truckers deliver a load and submit an invoice to a factoring company.
- The factoring company advances payment, usually 70-90% of the invoice amount, within 24-48 hours.
- The factoring company collects payment from the broker or shipper.
- The factoring company sends the remaining balance to the trucking company after taking its fee.
- This helps trucking companies avoid cash flow gaps while they wait for brokers to pay, which can sometimes take 30, 60, or even 90 days.
Can Brokers Ignore a Notice of Assignment?
No, they can’t — at least, not legally. After the factoring company sends the notice, brokers must pay the factoring company directly. If they fail to do so and pay the carrier instead, they may still have to pay the invoice to the factoring company. This protects the factoring company and helps truckers get the cash they need without payment disputes.
What Is an NOA Release Letter and When Is It Needed?
An NOA release letter is issued when a trucking company ends its relationship with a factoring company. This document is used to notify your customers that the assignment of accounts receivable has ended, and all future payments should be sent directly to the carrier or the new factoring company.
A trucking company might need an NOA release letter when:
- They switch to a different factoring company.
- They decide to stop factoring their invoices.
- Their business relationship with the factoring company is terminated.
This letter helps avoid confusion and ensures that payments don’t go to the wrong party.
Why Understanding NOAs Matters
For truckers, NOAs are a crucial part of keeping your cash flow stable. Without a proper assignment payment setup, brokers might pay the wrong party, delaying your working capital and causing unnecessary stress.
If you’re considering factoring or switching factoring companies, understanding NOAs and what an NOA release letter does will help you stay in control of your payments.
Need More Info on Factoring?
At Apex Capital, we make factoring easy and transparent. If you have questions about assignment letters, NOAs, or how factoring works, check out our free comprehensive factoring guide to help keep your trucking business moving forward.
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.