# What is a notice of assignment (NOA)?

URL: https://merchantfundexpress.com/what-is-a-notice-of-assignment/
Updated October 15, 2026. Published by Merchant Fund Express.

A notice of assignment (NOA) is a letter that tells your customer you have sold or assigned your invoices to a factoring company and that future payments on those invoices must go to the factor's account. It is usually prepared by the factor and signed by you, and the customer's accounts payable team acknowledges it and updates its payment instructions. Because the customer has to process that change, the NOA is often what makes the first factoring funding take longer than later ones.

## What the notice says
An NOA is short. It typically includes your business name, the factoring company's name, a statement that your receivables have been assigned, new remittance instructions (bank account or lockbox), the instruction that payments to anyone else may not satisfy the debt, and a request that the customer sign and return an acknowledgment. Some customers also ask for a W-9 or vendor form for the new payee.The legal reason is simple. Under commercial law in most states, once a customer has been properly notified, paying the original vendor instead of the assignee may not discharge what it owes. That is why factors insist on the notice before they advance against invoices.

## Who sends it and what the customer does
The factor prepares it, often on your letterhead or as a joint letter.You sign it and introduce it to your customer, ideally with a call to your contact in accounts payable so the letter does not look unexpected.The customer's AP team reviews it, sometimes checks with you by phone, updates the vendor payment record and signs the acknowledgment.The factor confirms that the change is in place, sometimes by verifying an invoice with the customer directly.Future payments on assigned invoices go to the factor, which deducts its advance and fee and sends you the balance.Your customer's payment terms do not change. It still pays on net 30, 60 or 90; only the destination of the payment changes.

## Why it can delay the first funding
Large customers have vendor-change controls designed to stop payment fraud. A change of remittance account may need several approvals, a callback to you and a form in their vendor portal. Government customers often have their own assignment rules. Until the customer acknowledges the NOA, many factors will not fund, or will fund a smaller amount.Spring (spring.ai) describes the same pattern for its retailer factoring and PO financing. According to its website, checked October 15, 2026, Spring says the first funding usually waits on the retailer's notice of assignment, which takes days to a couple of weeks depending on the retailer, and that later invoices are typically funded within 24 hours. Spring also publishes a post titled "What is a NOA." Spring's factoring is aimed at consumer brands selling to large retailers and distributors; see our Spring review.

## Sample timeline
An illustrative timeline for a first factoring setup with a mid-sized business customer:Day (illustrative)What happensDay 1You apply and send open invoices, customer list and bank statementsDays 1 to 2Factor reviews your customers' credit and your invoices; you receive an offerDay 2You sign the factoring agreement and the NOA; you call your customer's AP contactDays 2 to 3NOA is delivered to the customerDays 3 to 10Customer's AP processes the vendor change and signs the acknowledgmentAfter acknowledgmentFirst advance is funded on the assigned invoicesLater invoicesUsually much faster, because the customer is already set upCustomer's due dateCustomer pays the factor; the factor sends you the reserve minus its feeA customer with a slow vendor-change process can stretch the middle step. A customer you have already introduced to the change can shorten it.

## How the NOA fits MFE's invoice factoring
MFE's invoice factoring is for invoices to business or government customers on net 30 to 90 terms. Customer notification is part of standard factoring, so plan for the first funding to take longer than later ones, and tell us early which customers you want to factor and who their AP contacts are. If you need cash before the NOA clears, ask whether a working capital loan or merchant cash advance makes more sense for that gap; the trade-offs are covered in invoice factoring vs MCA. To start, apply online.

## Tips to keep your customer relationship smooth
Tell the customer before the letter arrives, and explain that terms and service stay the same.Give the factor the right AP contact and any vendor-portal requirements.Factor the customers whose payments matter most, not necessarily every account.Keep invoices clean: correct PO numbers, delivery proof and no disputed items.Watch for payments still sent to you by mistake and forward them as your agreement requires.

## FAQ
**Will my customer know I am factoring?** In notification factoring, yes, because the NOA tells them to pay the factor. Most business customers treat this as routine. Some factors offer non-notification arrangements, but they are less common and usually cost more.

**Does an NOA change my customer's payment terms?** No. The customer keeps its normal terms, such as net 30, 60 or 90. Only the payee and remittance details change, so the customer pays the factoring company instead of your business.

**How long does an NOA take to process?** It depends on the customer. Smaller customers may acknowledge within a day or two; large retailers and government agencies can take one to two weeks or more because of vendor-change controls and approvals.

**What happens if my customer pays me instead of the factor?** Your agreement will usually require you to forward that payment to the factor promptly. Repeated misdirected payments can cause problems with the factoring relationship, so confirm the customer has updated its records.

**Can I end an NOA?** When the factoring relationship ends and the balance is settled, the factor sends a release letter telling the customer to resume paying you directly. Ask how the release works before you sign.

Sources: https://www.spring.ai/invoice-factoring; https://www.spring.ai/faq
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