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Learn About Notice of Assignment for Invoice Factoring

In a factoring relationship, you agree to assign your selected receivables to the factoring company. By advancing your cash against your invoices, the factor has purchased the right to collect amounts due from your customers. The Notice of Assignment is a critical part of your factoring paperwork as it reflects the change in invoice ownership.

What is a Notice of Assignment?

The Notice of Assignment is a simple letter the factoring company sends to your customers whose invoices you are factoring. In writing, the notice informs your customers that the accounts receivable is assigned, and future payments should be made payable to the factoring company. The notice will also include a remittance address so your customer can change their payment information.

The Notice of Assignment legally explains to your customers that any payments they make to you instead of the factor will not satisfy their obligation. The factoring company may hold your customers liable for misdirected amounts. This may occur if your customers choose to ignore the notice or fail to update payment information.

Many factors will require your customers to sign and return a copy of the notice to acknowledge receipt. This is not always required, though. Instead, the Notice of Assignment may include language that considers your customer’s continued use of your services to constitute an agreement to the notice. In addition, the factor may only revoke a Notice of Assignment if they send a signed and notarized release notification to your customers. They will do so if you choose not to factor that account any longer or you end your factoring relationship. In either case, the account must have no outstanding balance.

What Programs Don’t Use a Notice of Assignment?

Financing programs that do not use a notice of assignment include non-notification factoring and sales ledger financing.

Non-notification factoring is similar to regular factoring, but with a few key differences. Instead of sending a conventional Notice of Assignment to customers, the factoring company informs them of a new payment address using the company’s regular letterhead. This allows the customer to still send payments to the new address without being aware that it belongs to the factor. To qualify for non-notification factoring, companies typically need to have monthly revenues of at least $300,000, a track record of over a year, reliable financial reports, and no serious financial difficulties.

Sales ledger financing operates like a line of credit based on outstanding receivables. Companies can access up to 90% of their outstanding receivables at any given time without the need to submit a factoring schedule of accounts for each transaction. Although the finance company still handles payments, the customer does not receive a Notice of Assignment. Instead, they receive a letter indicating a change in the payment address. Sales ledger financing offers greater flexibility compared to non-notification factoring, with daily rates allowing for better cost control. The qualification requirements for sales ledger financing usually include monthly revenues of at least $300,000, a track record of 1-2 years, reliable financial reports, good receivables management systems, and no serious financial difficulties.

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Why do Factoring Companies Notify Your Customers?

The Notice of Assignment is a vital form of protection for a factoring company. It protects the factor in case the business owner (the factor’s client) receives the payment instead of the factoring company.

In a best-case scenario, the notice serves to inform every party in a factoring transaction of their rights and responsibilities. It also gives your customer the appropriate address to make account payments, allowing your factoring relationship to continue smoothly.

In a worst-case scenario, a factor can recover unpaid amounts from your customer should they continuously pay over notice or not pay at all. A Notice of Assignment is evidence in any legal proceeding — from a demand letter for payment to a full-fledged lawsuit — that asserts the factor’s standing and rights to payment.

What Will Your Customers Think?

Customers may have concerns or questions when they receive a letter regarding the use of invoice factoring. It’s understandable that they may be unsure or unfamiliar with this financing tool. As a business owner, it’s important to address these concerns and communicate with your customers effectively.

First and foremost, it’s essential to acknowledge that invoice factoring is a common practice utilized by many small and midsize companies to finance their operations and facilitate growth. Chances are, your customers are already aware of this financing method and how it works.

When discussing invoice factoring with your customers, emphasize the benefits it provides to them. By using factoring, you can offer them extended payment terms, such as 30- to 60-day terms, while still ensuring excellent service. This enables your customers to utilize their available cash resources more effectively. Without factoring, providing extended payment terms might be challenging, especially for businesses experiencing growth.

It’s crucial to assure your customers that little is changing in terms of the services and support your company provides. Reassure them that they will still have the same level of communication and engagement with you and your employees as before. Highlight that despite factoring being implemented, your commitment to their satisfaction remains unchanged.

Address the misconception that factoring indicates financial trouble within your company. Remind your customers that factoring is a versatile tool used to achieve various goals and objectives, just like other forms of financing such as loans or lines of credit. Factoring simply serves to smooth out your cash flow and support your business’s overall financial stability and growth.

Overall, open communication with your customers is key. Provide them with transparency and reassurance, explaining the benefits of factoring and emphasizing that it is a common and established financing practice. By effectively addressing their concerns, you can foster trust and maintain strong relationships with your valued customers.

Why a Notice of Assignment Matters To You

You will receive a copy of the Notice of Assignment that the factor sends to your customers. While the notice is to inform your customers, it also has an important implication for you as well.

As your factoring agreement explains, payments your company receives from your customers over notice are payable to the factoring company. Even in the smoothest transition, you may receive payments sent before receipt of the notice or released before your customers’ updated their payment system. There will likely be a provision explaining the procedure for sending misdirected payments to the factor in these cases. Misdirected payments are usually sent by overnight check or via bank transfer.

However, you may be responsible for additional penalties and fees if your customers continue to pay over notice, and you deposit those payments into your account. In addition, you may end up owing more, depending on fee structure, due to the extra time it takes for the factor to receive payment. Some factors include a misdirected payment fee in the factoring agreement that you will have to pay if you fail to return misdirected payments to the factor. Therefore, fees may be higher if you are responsible for the misdirection.

As with any legal document, be sure to be fully aware of the language used within the Notice of Assignment. Be mindful of your customers’ responsiveness to the notice. Take action immediately if you realize that any of your customers are not sending their payments on time. This transparency solidifies your factoring relationship, builds trust with your factor, and protects your interests.

What if the Payment is for an Invoice I Didn’t Factor?

When you assign your customers’ receivables to your factoring company, you agree to direct all payments to the factor, even for invoices that you did not factor. This eliminates complications for all parties and ensures that the factoring company receives every payment they should. Without an all-inclusive assignment, your customers would receive a notification every single time you factor an invoice. They would have to retain two addresses on file, increasing the likelihood of misdirected payments.

Your factoring company will have a straightforward procedure in place to address non-factored payments. This may include applying those payments to open invoices and sending you the difference or the total amount in a regularly scheduled reserve release. Stay prepared by asking your factor about their policies surrounding non-factored payments.

Factor Finders can help you find the right factoring company for your invoice factoring needs. Contact us to learn more about our factoring services for every industry and to get started today.

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What is a notice of assignment?

An assignment takes place when one party is holding a right to property, claims, bills, lease, etc., of another party and wishes to pass it along (or sell it) to a third party. As complicated as that sounds, it really isn’t. Strangely enough, many assignments can be made under the law without immediately informing, or obtaining the permission, of the personal obligated to perform under the contract. An example of this is when your mortgage is sold to another mortgage company. The original mortgage company may not inform you for several weeks, and they certainly aren’t going to ask your permission to make the sale.

If a person obligated to perform has received notice of the assignment and still insists on paying the initial assignor, the person will still be obligated to pay the new assignee according to the agreement. If the obligated party has not yet been informed of the assignment and pays the original note holder (assignor), the assignor is obligated to turn those funds over to the new assignee. But, what are the remedies if this doesn’t take place? Actually, the new assignee may find themselves in a difficult position if the assignor simply takes off with their funds or payment. They are limited to taking action against the person they bought the note from (assignor) and cannot hold the obligator liable. Therefore, it is important to remember that if any note or obligation is assigned to another party, each party should be well aware of their responsibilities in the transaction and uphold them according to the laws of their state. Assignment forms should be well thought out and written in a manner which prevents the failure of one party against another.

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What Is A Notice Of Assignment In The Trucking Industry?

To understand a notice of assignment, trucking company owners first have to be familiar with factoring—and to understand factoring, we’ll have to discuss the nuances of cash flow in the shipping industry.

Basically, the challenge for fleet owners (and owner-operators) is that their customers take forever to pay their invoices. You deliver a load and issue the invoice. The shipper may take 30 or 45 or 60 days—or more—to pay that invoice. Meanwhile, you’ve got fuel costs, payroll, insurance payments, and the thousand other financial obligations that keep your trucks on the road. You need that invoice paid now .

Factoring is the industry’s solution for quick payments to carriers. A factoring company steps in and pays your invoice today. Then that company collects from your customer, the shipper or broker who hired you to haul a given load. For their service, the factoring company keeps a low percentage of the total invoice value. (With Bobtail, the factoring fee ranges from 1.99% to 2.99%, depending on the volume of invoices you factor.)

Note that factoring is not a loan; the factoring company buys your invoices, so there’s no compounding interest or credit impact. Factoring beats loans as a cash-flow solution, hands down.

Struggling with slow payments from shippers and brokers? Keep cash flowing the simple way with Bobtail factoring.

With these preliminaries out of the way, we’re ready to answer the question that brought you here: What exactly is a notice of assignment in trucking?

Defining The Notice Of Assignment In Trucking

Factoring requires shippers and brokers to make changes in their billing systems. You’re no longer the collector on a factored invoice; the factoring company is. Accounts payable departments are busy places, and it’s easy for a shipper’s finance team to get confused when you do the work but another company collects the payment (after that company pays you, of course).

A notice of assignment clears up the billing relationship in a factoring agreement. A notice of assignment is a contractual document, supplied to both the carrier and the customer, that tells the customer to pay the factoring company, not the carrier.

The notice of assignment is an essential piece of paperwork, one of the documents you’ll have to keep on file as you establish a factoring relationship. You’ll have to sign the notice of assignment, and so will your customer. In short, this is a contractual agreement that carries legal consequences, and clarifies who exactly the shipper should pay for a delivered load.

Why is a notice of assignment important?

Consider the case of a trucking company that shifts to factoring after months or years of collecting directly from a shipper. That carrier’s payment details are already set up in the shipper’s accounting systems. Due to accidents or willful fraud, it’d be easy for the carrier to collect on an invoice twice—once from the factoring company and again from the customer.

In that scenario, the factoring company loses money, or at least becomes embroiled in a flurry of paperwork and legal challenges. So the notice of assignment is designed to protect the factoring company. But this document provides benefits for you, the carrier, and your customers, too.

How A Notice Of Assignment Benefits Shippers And Carriers

Who needs more paperwork? While it may seem like just another legal document, notices of assignment are actually helpful for all three parties involved in a factoring payment deal: the factoring company, sure, but also the carrier and the customer.

For shippers , the notice of assignment is a strong incentive to update payment details in their accounting systems. It delineates the nature of the financial agreement. It provides visibility and clarity that avoids conflict down the line. Most importantly, factoring companies require shippers to sign a notice of assignment—and factoring benefits customers, too. It keeps them from having to renegotiate payment terms, and gives them the full 30 or 60 days to pay, which allows them to optimize their own cash utilization.

Carriers also benefit from the clarity that comes with a notice of assignment. This document allows you to rest assured that the customer won’t accidentally pay you for a factored invoice, so you don’t have to spend all day trying to get the money into the right hands—or face collection threats of your own.

The binding agreement contained within a notice of assignment protects you from legal problems. It’s simply smart business to make sure everyone knows exactly who should get paid, and for what. Notices of assignment accomplish this goal—and, with Bobtail, the paperwork is simpler than you might think.

Simplifying Notices Of Assignment

Traditional factoring companies aren’t the most efficient financial operators in the world. They make you sign restrictive contracts. They might even tell you who you can work with, and who you can’t. They stack hidden fees on everything from set-up to ACH transfers to terminating the deal. And they make you fill out reams of paperwork before depositing a cent.

Bobtail is different every step of the way. We started this company to eliminate the inefficiencies in the factoring process, and that includes personalized assistance with handling notices of assignment.

When you sign up with Bobtail—a quick, online process involving a single application form—you’ll get a personal account manager who’s always ready to answer questions and solve problems. They’ll issue your notice of assignment and make sure your customers understand the document and why it’s necessary.

All you have to do is carry on carrying loads.

When you decide to factor an invoice, the process is even simpler. Just deliver the load, upload the invoice, attach a rate confirmation and a bill of lading, and get paid. It’s all done through Bobtail’s online system, so you can handle financing from the rig. We also provide a user-friendly digital dashboard that makes it easy to track every invoice at every step of the financing process. There’s simply no easier way to factor an invoice.

Notice of assignment trucking - Bobtail dashboard

At Bobtail, we believe that you know what’s best for your business. That’s why we don’t make you sign a long-term contract; this is no-contract factoring. You pick which accounts to factor and which to collect from directly, and we don’t have volume requirements or exclusive financing deals.

We also don’t charge hidden fees. You just pay a flat factoring fee so there’s no confusion on exactly how much cash will hit your bank account—or when. Invoices are filled the same day you submit them, or the next day if the invoice arrives after 11 a.m. Eastern time.

Don’t be intimidated by a notice of assignment in trucking—or any other documents related to your factoring service. With Bobtail, our devoted customer service team makes sure everything runs smoothly, and we’re there to help every step of the way. Or, as one Trustpilot review puts it:

“They always answer the phone! The staff is very helpful and cordial. The three things I love are: Payments are on time, the website is easy to use, and great customer service!”

(Read more customer reviews on Trustpilot.)

Ready to improve cash flow without the headaches? Sign up to learn more today.

If you have questions about account set-up, notices of assignment, or anything else related to factoring, contact the Bobtail sales team at (410) 204-2084, or email us at [email protected].

Caroline Asiala is the Digital Marketing Manager at Bobtail. With a background rooted in advocating for migrant rights, Caroline leverages her expertise in content creation to support small trucking businesses, many of which are immigrant-owned and operated, with the information they need to make their businesses thrive.

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Factoring Notice of Assignment (NOA): Everything You Need to Know

A Notice of Assignment (NOA) is one of the most important parts of your factoring relationship. Find out what an NOA is and why it matters here.

A factoring notice of assignment (NOA) is usually required when you factor your invoices. Rest assured, NOAs are quite common in business and aren’t a cause for concern. However, it helps to understand what they are and how they work so that you can explain them to your customers as needed.

Assignment of Debt Explained

Companies transfer debt, along with all associated rights and obligations, to third parties all the time. One example of this occurs with collection companies. In these cases, the business, also referred to as the creditor, sells its uncollectable balances or assigns specific debts to the collection company. The collection company is then authorized to collect those specific balances on behalf of the creditor.

Assignment of debt may also come into play when businesses outsource their receivables and leverage certain types of funding, among other situations.

What Does Notice of Assignment Mean?

The customer, also referred to as the debtor, must be informed when a creditor assigns their debt to a third party. The document used in this process is referred to as a notice of assignment of debt.

What is a Notice of Assignment in Factoring?

When you leverage invoice factoring , you’re selling an unpaid B2B invoice to a factoring company at a discount. In exchange, you receive up to 98 percent of the invoice’s value right away and get the remaining sum minus a small factoring fee when your client pays. This means you’re not waiting 30, 60, or more days for payment. This cash flow acceleration helps businesses bridge cash flow gaps caused by slow-paying customers, seasonality, rapid growth, and more. Plus, the cash can be used for anything the business needs. This unique process means businesses can receive immediate funding without creating debt like other funding sources.

A notice of assignment is required in factoring because you’re assigning debt to a third party – the factoring company – and the customers involved need to know.

The Role of Notice of Assignment for Cash Flow

Invoice factoring stands out as a solution for businesses seeking to improve their cash flow. When a company decides to use invoice factoring, it enters into a factoring relationship, where accounts receivable and financial rights are handled differently than usual. This process involves the NOA, a pivotal document in factoring transactions. Essentially, NOA is a simple letter informing customers that the payment terms have changed and future payments should be made payable to the factoring company.

This notification ensures that there are no misdirected payments, which is a critical aspect when managing accounts payable and securing immediate cash. By using factoring, businesses can access working capital, which reduces the strain of slow-paying customers. It’s important for factoring clients to understand how factoring companies notify your customers and the implications of this process. The factoring contract typically outlines these details, ensuring that every party in a factoring transaction is aware of their responsibilities, especially regarding remittance addresses and payment information.

Factoring services offer an alternative to traditional lines of credit, providing businesses with high advances at low rates. This method is beneficial for companies that demand longer payment terms from their clients. By transferring the right to collect payments to the factoring company, the business can focus on its core operations while the finance company handles the receivables. Understanding the benefits of factoring and effectively communicating them to your customers may improve the factoring process and maintain healthy customer relationships, even when introducing new financial arrangements like invoice factoring.

The Importance of a Notice of Assignment in Factoring

Notice of Assignment in invoice factoring keeps your customers in the loop so they know who is collecting and why. It also lets them know where to send their payments. This streamlines the process and helps ensure there’s no confusion about where payments need to go.

Elements of a Factoring NOA Document

Each factoring company words its NOA a bit differently, but NOAs usually include:

A statement that indicates the factoring company is now managing the invoice or invoices.
A notice that payments should be made to the factoring company.
Details on how payments can be made, including addresses, bank details, or payment portal information.
What will occur if payments are sent to the business instead of the third party.
A signature from someone at your business to show your customer that the NOA is authentic and a signature space for your customer to sign indicating that they’ve read and understand the document.

How Do Factoring Companies Notify Your Customers

A factoring notice of assignment is usually sent to customers by U.S. mail, though sometimes factoring companies use other delivery services or even digitize the NOA.

What Will Your Clients Think of You Factoring Your Invoices?

Sometimes, businesses that are new to invoice factoring have concerns about how customers will react to factoring or receiving an NOA. However, it’s usually not a cause for concern.

Although your factoring company isn’t an outsourcing company, it behaves quite similarly when collecting invoices. Nearly 40 percent of small businesses outsource at least one business process, Clutch reports. That means a significant portion of your customers already have some experience engaging with third parties. Furthermore, invoice factoring is growing in leaps and bounds and is expected to grow by eight percent in the coming years, per Grandview Research . Many of your customers already have experience with factoring or will very soon. Because most businesses have some exposure to factoring or will in the near future, it’s generally seen as an ordinary business practice – nothing more, nothing less.

However, even if factoring is entirely new to your customers, how they respond to your decision is often determined by how you present it. For instance, it accelerates payments without putting pressure on your customers to pay faster. It has benefits for them, too, and can help improve the relationship. This alone can actually help some businesses win bids or attract new customers. Explaining it to them this way can help soothe any concerns if customers come to you with questions.

How to Ensure Your Customer Relationships Are Protected

Most factoring companies will take good care of their customers because they are a reflection of you. Your repeat business helps ensure they’ll have repeat business. However, reviewing a factoring company’s testimonials and success stories is always a good idea to understand better how they operate before you sign up.

It’s also essential to work with a company like Viva that doesn’t send mass notifications to all its customers. We only notify those who are debtors on the invoices you’d like to factor to eliminate any confusion.

Lastly, it’s better to work with a company that provides you with 24/7 access to your account so you can see what’s paid and outstanding at a glance and can make decisions about orders using real-time data.

Request a Complimentary Invoice Factoring Quote

At Viva Capital, we always provide white glove care to the businesses we serve and their customers.As part of our service, we handle the Notice of Assignment with professionalism. Our collection experts make it easy for your customers to manage their bills and are happy to answer their questions. You’ll also have access to your personal Customer Account Portal so you can make informed decisions on the fly and always know what’s outstanding. To learn more or get started, request a complimentary invoice factoring quote .

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Legal Templates

Home Business Assignment Agreement

Assignment Agreement Template

Use our assignment agreement to transfer contractual obligations.

Updated February 1, 2024 Reviewed by Brooke Davis

An assignment agreement is a legal document that transfers rights, responsibilities, and benefits from one party (the “assignor”) to another (the “assignee”). You can use it to reassign debt, real estate, intellectual property, leases, insurance policies, and government contracts.

What Is an Assignment Agreement?

What to include in an assignment agreement, how to assign a contract, how to write an assignment agreement, assignment agreement sample.

Partnership Interest

An assignment agreement effectively transfers the rights and obligations of a person or entity under an initial contract to another. The original party is the assignor, and the assignee takes on the contract’s duties and benefits.

It’s often a requirement to let the other party in the original deal know the contract is being transferred. It’s essential to create this form thoughtfully, as a poorly written assignment agreement may leave the assignor obligated to certain aspects of the deal.

The most common use of an assignment agreement occurs when the assignor no longer can or wants to continue with a contract. Instead of leaving the initial party or breaking the agreement, the assignor can transfer the contract to another individual or entity.

For example, imagine a small residential trash collection service plans to close its operations. Before it closes, the business brokers a deal to send its accounts to a curbside pickup company providing similar services. After notifying account holders, the latter company continues the service while receiving payment.

Create a thorough assignment agreement by including the following information:

Effective Date: The document must indicate when the transfer of rights and obligations occurs.
Parties: Include the full name and address of the assignor, assignee, and obligor (if required).
Assignment: Provide details that identify the original contract being assigned.
Third-Party Approval: If the initial contract requires the approval of the obligor, note the date the approval was received.
Signatures: Both parties must sign and date the printed assignment contract template once completed. If a notary is required, wait until you are in the presence of the official and present identification before signing. Failure to do so may result in having to redo the assignment contract.

Review the Contract Terms

Carefully review the terms of the existing contract. Some contracts may have specific provisions regarding assignment. Check for any restrictions or requirements related to assigning the contract.

Check for Anti-Assignment Clauses

Some contracts include anti-assignment clauses that prohibit or restrict the ability to assign the contract without the consent of the other party. If there’s such a clause, you may need the consent of the original parties to proceed.

Determine Assignability

Ensure that the contract is assignable. Some contracts, especially those involving personal services or unique skills, may not be assignable without the other party’s agreement.

Get Consent from the Other Party (if Required)

If the contract includes an anti-assignment clause or requires consent for assignment, seek written consent from the other party. This can often be done through a formal amendment to the contract.

Prepare an Assignment Agreement

Draft an assignment agreement that clearly outlines the transfer of rights and obligations from the assignor (the party assigning the contract) to the assignee (the party receiving the assignment). Include details such as the names of the parties, the effective date of the assignment, and the specific rights and obligations being transferred.

Include Original Contract Information

Attach a copy of the original contract or reference its key terms in the assignment agreement. This helps in clearly identifying the contract being assigned.

Execution of the Assignment Agreement

Both the assignor and assignee should sign the assignment agreement. Signatures should be notarized if required by the contract or local laws.

Notice to the Other Party

Provide notice of the assignment to the non-assigning party. This can be done formally through a letter or as specified in the contract.

File the Assignment

File the assignment agreement with the appropriate parties or entities as required. This may include filing with the original contracting party or relevant government authorities.

Communicate with Third Parties

Inform any relevant third parties, such as suppliers, customers, or service providers, about the assignment to ensure a smooth transition.

Keep Copies for Records

Keep copies of the assignment agreement, original contract, and any related communications for your records.

Here’s a list of steps on how to write an assignment agreement:

Step 1 – List the Assignor’s and Assignee’s Details

List all of the pertinent information regarding the parties involved in the transfer. This information includes their full names, addresses, phone numbers, and other relevant contact information.

This step clarifies who’s transferring the initial contract and who will take on its responsibilities.

Step 2 – Provide Original Contract Information

Describing and identifying the contract that is effectively being reassigned is essential. This step avoids any confusion after the transfer has been completed.

Step 3 – State the Consideration

Provide accurate information regarding the amount the assignee pays to assume the contract. This figure should include taxes and any relevant peripheral expenses. If the assignee will pay the consideration over a period, indicate the method and installments.

Step 4 – Provide Any Terms and Conditions

The terms and conditions of any agreement are crucial to a smooth transaction. You must cover issues such as dispute resolution, governing law, obligor approval, and any relevant clauses.

Step 5 – Obtain Signatures

Both parties must sign the agreement to ensure it is legally binding and that they have read and understood the contract. If a notary is required, wait to sign off in their presence.

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What is a Notice of Assignment?

What is a Notice of…

A factoring contract can contain many parts, but few are as important as the Notice of Assignment.

What are the parts of a notice of assignment.

A notice of assignment contains a few standard parts. First, it informs your customers that you are factoring your invoices and that your factoring company has been assigned as the payee for your accounts receivables. Next, a notice of assignment provides your customer with an updated remittance address for all current and future payments to be sent to. Third, it contains explicit instructions that all payments should be made to the factoring company’s remittance address only, and that no other payments should be made to any other address without explicit permission from the factoring company. It also contains verbiage that states that payments made in conflict to this notice of assignment will not be considered to have discharged a customer’s obligation for payment to the factoring company. Lastly, the factoring client signs the notice of assignment to prove it is valid.

Why do my customers need to know that I’m factoring?

The right to receive payments for amounts owed is one of the main protections a factoring company has in the factoring process. It is an essential part of almost every factoring program. In order to assure that payments are directed appropriately, a factoring company must contact a customer to verify that the notice of assignment has been accepted and the remittance address has been updated.

Why does my factoring company receive payments for invoices that weren’t factored?

A notice of assignment gives your factoring company the right to collect for ALL payments owed to you by your customer. Some factoring companies require that you factor every invoice for your customers, making this a non-issue. However, if you are working with a factoring company that allows you to pick and choose which invoices to factor for a customer, your factoring company will also receive payments for those unfactored invoices.

This happens for two reasons. First, allowing multiple remittance addresses for a payee exponentially increases the chance of a misdirected payment being made. Second, asking the customer to shoulder the additional workload of keeping track of which payments should be made to which remittance address would make invoice factoring unattractive for many customers, and thus limit the number of companies willing to work with a business that was factoring. All factoring companies have policies to efficiently deal with unfactored payments when they arrive.

What happens if I receive a payment that should have been sent to my factoring company?

Most factoring companies understand that accidents happen, and mistakes will be made. If an error in payment occurs in good faith, factoring companies have processes in place to deal with the issue. Firstly, it is important that a factoring client does not deposit the payment into their account, but rather they should immediately notify their factoring company of the errant payment and send it immediately to their factoring company. If a factoring client fails to do so, or attempts to hide the payment from their factoring company, then that client will be responsible for a misdirected payment, which often carries heavy penalties in the factoring contract.

13 February 2023

Notice of Assignment in Factoring in the U.S

When a business uses invoice factoring, they transfer ownership of its accounts receivable to a factoring company, which then has the responsibility to collect payment for those invoices.

Therefore, a document is issued to alert its customers of this. This is known as a notice of assignment.

Meaning of Notice of Assignment

A notice of assignment is a document that notifies clients that a factoring company has acquired ownership of their accounts receivable, or invoices, from the original business.

The notice's objective is to alert customers to the ownership change and specify who should receive payments.

Importance of Notice of Assignment

A notice of assignment is vital because it officially notifies customers that the ownership of an invoice has changed hands and that they should now direct payments to the factoring company.

The notice helps ensure that payments are sent to the appropriate parties , avoiding misunderstandings and potential conflicts and preventing uncertainty.

In the event of a disagreement, having a detailed and official notice of assignment can safeguard the legal interests of both the company and the factoring company.

Impact of Notice of Assignment on Businesses

The possible impacts faced by businesses by using a factoring company and sending their customers a notice of assignment are:

1. Enhanced customer relationships: By providing clear and official notification to customers of the change in ownership of invoices, a business can help maintain and strengthen its relationship with them.

2. Improved cash flow: By transferring ownership of invoices to a factoring company, a business can receive payment more quickly and improve its overall cash flow.

3. Increased operational efficiency: By using a factoring company to manage the collections process, a business can free up internal resources and focus on its core operations, leading to increased efficiency.

4. Reduced risk: By transferring the responsibility of collecting payment to a factoring company, a business can reduce its exposure to the risk of non-payment and bad debt.

However, before deciding to utilize factoring , it's crucial to consider any potential drawbacks, such as losing control over the collection process and the expense of the factoring service.

Factors Covered in a Notice of Assignment The main sections covered are:

The company's accounts receivable have been transferred to a third-party financial institution, and payment should now be made to them
The customer should now send payments to a new address, typically a secure payment processing location
The customer will be responsible if they make a payment to the wrong address

Information in a Notice of Assignment

In a factoring notice of assignment, the following details are covered to notify the business’ customer about the transfer of ownership of accounts receivable:

Particulars of the accounts receivable being assigned , including the amount and invoice numbers
Details of the factor and the client/debtor
Specifics of the assignment of the accounts receivable, including the effective date and any conditions of the assignment
Instructions for the customer on how to direct future payments to the factor
Any other relevant terms and conditions of the factoring agreement

What Happens When an Obligor Doesn’t Receive Notice of Agreement

A business that sells its accounts receivables (invoices) to a third-party factor must send a notice of agreement to its customers.

The purpose of the notice is to inform the customer that the factor has taken ownership of the invoice, and the payments should be made directly to the factor instead of the business.

If the customer does not receive the notice, they may continue to make the payments to the business, leading to confusion, delayed payments to the factor and potential disputes.

In some cases, the customer may have the right to demand a return of the payment made to the factor or stop payment if the notice of assignment was not correctly given.

How to Receive Notice of Agreement

A factoring notice of agreement is typically provided by the factoring company or third-party factor that has purchased the accounts receivable (invoices) from the business.

The notice is usually generated by the factor and given to the business to send to its customers.

The business may also be responsible for ensuring that the notice of assignment is delivered correctly to its customers.

Some factoring companies provide templates or sample notices that the business can use.

Requirements for a Notice of Assignment

To obtain a notice of assignment (NOA) from a factoring company, the following requirements are necessary:

Monthly revenue of at least $300,000
A stable financial track record of 1-2 years
Accurate and trustworthy financial reports
Effective management of accounts receivable
No significant financial difficulties

1. Who Sends a Factoring Notice of Assignment? A factoring notice of assignment is typically sent by the business that has sold its accounts receivables or invoices to a third-party factor or factoring company.

The factor usually provides the notice of assignment, and the business may have to sign a factoring agreement with the factor to obtain the notice.

The notice informs the business’ customers that the factor has taken over the ownership of the invoices, and the payments should be made directly to the factoring company instead of the business.

2. How Much Does a Notice of Assignment Cost? The cost for issuing a notice of assignment in factor can differ based on various elements, such as the amount assigned, the state where the assignment is taking place and the particular provisions of the assignment agreement.

This cost may include legal fees, filing paperwork fees and other administrative expenses. It's crucial to examine the assignment agreement thoroughly to determine the precise cost and be aware of any additional fees that may be incurred.

3. How Long Does a Notice of Assignment Take? The duration of issuing a notice of assignment in factoring can differ based on particular circumstances. Usually, the process can take anywhere between a few days to weeks.

The length of the time may be influenced by factors such as the state in which the assignment is getting issued, the complexity of the assignment agreement and the accessibility of relevant parties.

Moreover, the time needed for the notice of assignment may be affected by any legal challenges or hindrances.

4. Does Notice of Assessment Mean You Owe Money? In the United States, a notice of assessment usually implies that you owe money to the government.

However, it is contingent on particular circumstances. The Internal Revenue Service (IRS) sends out the notice of assessment to inform taxpayers of any modification to their tax obligations.

If the notice displays an increase in the amount owed, it implies that the taxpayer has an outstanding balance with the IRS and should pay it promptly to prevent further interest and penalties.

On the other hand, if it shows a decrease in the amount owed, it showcases that the taxpayer has paid more taxes than required and may be eligible for a refund.

It is, therefore, always advisable to thoroughly examine the notice and to get help from a professional.

5. Is Notice of Agreement a Proof of Debt? A notice of agreement alone is not considered proof of a debt. The document merely outlines the terms and conditions agreed upon by the parties involved.

It is not enough evidence to confirm the presence of debt but rather serves as a record of the agreement between the parties.

To establish proof of debt, other financial documents such as receipts, invoices or other documentation may be necessary.

The specific requirements for proving a debt depend upon the type of debt and the laws of the jurisdiction where it is being established.

6. What is a Letter of Release? A letter of release from a factoring company is a declaration that a debt has been satisfied and is no longer the company's responsibility.

In factoring, a business sells its accounts receivable to a factoring company for a fee to receive cash quickly.

Upon receiving the payment on the accounts receivable by the business’ customer, the factoring company issues a letter of release, confirming that the debt has been fully paid off and the company is no longer obligated to it.

The letter serves as proof that the debt has been fully resolved. It can be used to clear the debt from the business's financial records.

The specifics of the letter of release, including the terms and conditions, will depend on the particular factoring agreement and the laws in the jurisdiction where it is formed and drafted.

Siddhi Parekh

Finance manager at drip capital.

Table of Content

Information in a NOA
What Happens When an Obligor Doesn’t Receive NOA
How to Receive NOA
Requirements for NOA

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What is a Notice of Assignment?

Last Updated May 1, 2024

If you’re a business owner considering invoice factoring, the Notice of Assignment (NOA) may cause you some concern. What will my customers think? Why is it necessary? Can we skip sending it? Let’s address these questions to clarify what the NOA covers and put to rest any lingering apprehension.

What Is a Factoring Notice of Assignment?

The notice of assignment (NOA) informs your customer that a third party (bank, financing company, or factoring company) will manage and collect your accounts receivable (AR) going forward. The NOA arrives in the mail in the format of a letter, as the initial communication notifying your customers of the change in structure and process.

What Will My Customers Think?

Tremendous growth in the use of invoice factoring across many industries has made factoring more common than ever. According to the Global Factoring Market 2016-2020 report, analysts expect factoring to grow over 10% annually for the next several years.

Many of our factoring clients work with Fortune 500 companies who simply demand longer payment terms in order to do business. Clients using invoice factoring often show an appetite for accelerating growth and more efficiently managing operations and collections.

In short, you are most likely more concerned about it than your customers. Factoring is a widely used and acceptable means for financing your business.

Why Is a Notice of Assignment Important?

In a factoring relationship, a business sells the future collection of accounts receivable (AR) in exchange for cash advances. So, the asset (future AR) belongs to the third party upon completion of the work or delivery of the goods. The business receives the cash advance, and the third party waits for payment by the business’ customer.

Mildred Glaze, Senior Account Manager at altLINE, explains further, “The factor sends out the notice of assignment to be sure they place their client’s customers on notice to submit all payments to the factor and not to their client. The factor will essentially become their client’s accounts receivable department, documenting invoices and payments.”

Due to the intangible nature of AR, the third-party provider needs legal language showing ownership of the AR. Thus, the legal language found in the NOA minimizes the risk placed on the third-party provider. Third party providers require a NOA. It is critical to the structure of the factoring relationship and protects the third-party provider in the event of misdirected payments.

In the case of a redirected payment, Glaze explains, “If a payment is in inadvertently sent to the client [instead of the factoring company], then the client turns around and forwards/sends the original method of payment to the factor…We then turnaround and re-notify that particular customer to have them confirm updating the remittance in their system.”

What Is Covered in a Notice of Assignment?

The main points covered in a Notice of Assignment include:

Business’ accounts receivable has been assigned and is payable to a third party provider
Updated payment address, typically a lock box
Liability on the customer in the event of misdirected payment

How We’re Different

By working with altLINE, your customers recognize the reliability and stability of your financing partner. Rather than receiving an NOA from an unknown entity or independent financing company, the bank’s reputation as the lender of choice strengthens your customer relationship.

Read our article on the benefits of factoring through a bank for more information or get a free quote today!

What does a notice of assignment mean in trucking?

A notice of assignment (NOA) is a document that notifies your customers that your factoring company has the right to collect payments on invoices. In a factoring relationship, a business sells its invoices to a third-party factoring company, which then collects payment on them. An NOA notifies your customers of this change in structure.

Who provides a notice of assignment?

Grey was previously the Director of Marketing for altLINE by The Southern Bank. With 10 years’ experience in digital marketing, content creation and small business operations, he helped businesses find the information they needed to make informed decisions about invoice factoring and A/R financing.

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What Is a Factoring Notice of Assignment?

If you have already worked with a factoring company, then you have probably heard the term Notice of Assignment (NOA) before. There can be so much paperwork involved with the operation of a small business these days. It can be hard to keep up with the times and know what everything is.

For example, a notice of assignment (NOA) is actually a very common document utilized in the trucking industry. It’s ideal for companies using a factoring transaction service because a factoring fee will pay them on the load in advance.

From there, the factoring company will be responsible for collecting payment for the service from the customer. Today, we will be taking a deeper look into the Notice of Assignment to better understand the importance of NOAs and why we need them.

TAFS is More than Freight Factoring

How does an noa work.

Once a factoring company has paid the client for the load, it is important that the debtor knows that the money they owe is now due to another party. This official notification is delivered via a Notice of Assignment. It will be sent out to the debtor as a way of informing them that their payments must now be remitted to the factoring company instead of the carrier.

Why is an NOA Important?

An NOA is a legal document that acts as a way of notifying the debtor about who they need to pay. When a carrier works with a factoring company, the TAFs Factoring carrier will be paid in advance by the factoring company, so it is important that the debtor is informed of the presence of the third party that will now be managing that company’s accounts receivable (AR).

An NOA can also ensure that the debtor understands there’s a third party that will be collecting payments from them on behalf of the carrier. Notifying the debtor of this change will make it more likely to avoid payments being sent to the wrong party as well as conflicts and violations of the factoring client agreement.

What Is Covered in an NOA?

In a standard Notice of Assignment, you will find legal forms stating that the assignment of accounts receivable of the business has been assigned to a third-party provider. As such, payments are now payable directly to them.

The NOA will include an updated address of the third party so that the debtor knows where to send any future payments, as well as the third party’s phone number and a statement letting the customer know that he or she will be held liable in the event of a misdirected payment.

Will Factoring Affect My Work With My Client?

Working with a factoring company should not negatively impact any work that you do for your clients. The truth is that factoring is extremely common these days and in the larger picture, most business owners work with some form of a lender.

What you can do on a personal level to avoid any confusion or worry is to simply assure your customers that invoice factoring will not affect the service you are providing to them and they can continue to expect the same level of service and attention in working with you.

What Will Customers Think When They Receive an NOA?

Nowadays, a large percentage of companies use factoring or some sort of third-party financing option to help keep their operations flowing smoothly from one invoice payout to the next. This is often a display of good business management and dependability in the eyes of your clients. By taking control of your company’s finances, you’re letting them know that you are serious about your business and you plan to be around for years to come.

Is There a Financing Option That Will Not Send an NOA?

Select factoring companies may offer what is known as a non-notification factoring plan in which a conventional deed of assignment is not used. This plan is not often used because it leads to unnecessary confusion, which often results in payments being sent to the wrong party.

This happens because no matter what, the debtor is still required to mail the payment to the factoring company, but instead of an NOA being issued and making this clear, the company’s letterhead is included.

Example of an NOA

An NOA is often used in circumstances where a trucking company is utilizing a factoring company to manage their receivable financing for them. The Notice of Assignment is sent to the debtor with clear notification that the accounts receivable of the company they are doing business with are being managed by a third party.

It will properly advise the remittance address for their payments moving forward. With this official notice being received it is now up to the debtor to comply and update their system to make sure payments are processed to the correct party.

4 Things To Consider When Factoring

If you are going to use a factoring company here are some things you may want to consider regarding the NOA.

Responsibility

The responsibility lies with both the carrier and the factoring company. The factoring company will send NOAs to many debtors but it is hard for a factoring company to know every customer a carrier has or will work with. For this reason, the responsibility also falls on the carrier as well to notify all of their customers of the new payment conditions.

Requirements

The Notice of Assignment is required to be sent out so that the customer is fully aware of who they are legally obligated to pay. Without this notice, many payments would be sent to the incorrect party causing many issues that would deeply complicate the process.

If the trucking company accepts payment from the customer when it should have gone to the factoring company, the trucking company would be in violation of the contract and could be assessed additional fees or charged with fraud.

Being notified of a factoring company being used is not a bad thing. Utilizing a f actoring company allows the carrier the ability to maintain operations within the windows of payment terms on the loads which may not pay out for 30 days or 60 days. In some cases, it might even be 90 days.

Most factoring company contracts require carriers to submit every single invoice to minimize the likelihood of causing confusion. If the debtor has to change who they pay for different invoices, the odds are that errors will occur and payment will be sent to the wrong place. That is also why debtors don’t change who they pay after receiving an NOA unless they have an official release letter from the factoring company. This is a red flag for a carrier trying to commit fraud.

Receiving an NOA Is Actually a Good Thing

In conclusion, we now know that receiving an NOA will inform the recipient that the carrier they used is collecting money via a factoring company or other third-party business. As such, they will not be managing their accounts receivable. This means they are taking their business seriously and making moves to ensure their company will be around for years to come, and with the ability to grow and expand.

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As one of the industry leaders, TAFS assists trucking companies to increase cash flow with some of the lowest factoring rates in the industry and a 1-hour advance option.

TAFS Freight Factoring

As one of the industry leaders, TAFS assists trucking companies to increase cash flow with some of the lowest factoring rates in the industry and 1-hour advance option.

Notice of Assignment | Practical Law

Notice of Assignment

Practical law standard document 2-508-6945 (approx. 11 pages).

What is a Notice of Assignment and How Does it Protect the Construction Business?

by CapitalPlus Financial | Nov 8, 2023 | Blog

The Notice of Assignment, or NOA, is commonly used in business, including the construction industry. Let’s learn about the definition and how it protects us, construction businesses.

A Notice of Assignment is used when rights or obligations under a contract are transferred from one party to another. For example, if a company assigns its rights to payment under a construction contract to a third party like a factoring company , a Notice of Assignment would be sent to the party owing the payment to inform them of the new payee. The NOA helps to ensure that a construction company’s actions are transparent and that it has taken the necessary steps to inform and coordinate with all parties who may be impacted by its activities.

How does the “Notice of Assignment” protect construction trades?

Being a formal document, the Notice of Assignment states that a contract or obligation has been transferred from one party (the assignor) to another (the assignee). Here’s how it protects a construction company:

Clarity of Responsibility : An NOA clearly delineates the transfer of rights or obligations under a contract, such as the right to receive payment or the duty to perform work, ensuring that all parties know who is now responsible.
Proof of Notification : In the event of any disputes arising regarding the assignment, the NOA serves as legal proof that all parties were properly informed. This can be crucial in the event there is litigation or arbitration.
Protection of Payment Rights : For a construction company that has sold or assigned its right to receive payment for work performed, the NOA informs the client or project owner of the Factoring company to which payments should be made, thus protecting the company’s financial interests.
Avoidance of Duplication : The NOA prevents the original client from making payments to the assignor when the right to receive payment has been assigned to another entity, thus avoiding duplicate payments or financial confusion.
Legal Requirement : In some jurisdictions, a NOA is a legal requirement to enforce the assignment against third parties. Without it, the assignee may not be able to legally claim their rights under the contract.
Maintaining Business Relationships : By formally notifying clients of the assignment, the NOA provides the construction company transparency and trust in its business relationships, which is essential for ongoing and future business.

In summary, the Notice of Assignment ensures that all parties are informed about where contractual rights and obligations lie after an assignment has taken place.

If you have questions about NOAs or any other aspect of the invoice factoring process , feel free to reach out. We are glad to help.

Request a call from CapitalPlus to discuss your construction business's financial options.

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Contract Assignment Agreement

Rating: 4.8 - 105 votes

This Contract Assignment Agreement document is used to transfer rights and responsibilities under an original contract from one Party, known as the Assignor, to another, known as the Assignee. The Assignor who was a Party to the original contract can use this document to assign their rights under the original contract to the Assignee, as well as delegating their duties under the original contract to that Assignee. For example, a nanny who as contracted with a family to watch their children but is no longer able to due to a move could assign their rights and responsibilities under the original service contract to a new childcare provider.

How to use this document

Prior to using this document, the original contract is consulted to be sure that an assignment is not prohibited and that any necessary permissions from the other Party to the original contract, known as the Obligor, have been obtained. Once this has been done, the document can be used. The Agreement contains important information such as the identities of all parties to the Agreement, the expiration date (if any) of the original contract, whether the original contract requires the Obligor's consent before assigning rights and, if so, the form of consent that the Assignor obtained and when, and which state's laws will govern the interpretation of the Agreement.

If the Agreement involves the transfer of land from one Party to another , the document will include information about where the property is located, as well as space for the document to be recorded in the county's official records, and a notary page customized for the land's location so that the document can be notarized.

Once the document has been completed, it is signed, dated, and copies are given to all concerned parties , including the Assignor, the Assignee, and the Obligor. If the Agreement concerns the transfer of land, the Agreement is then notarized and taken to be recorded so that there is an official record that the property was transferred.

Applicable law

The assignment of contracts that involve the provision of services is governed by common law in the " Second Restatement of Contracts " (the "Restatement"). The Restatement is a non-binding authority in all of U.S common law in the area of contracts and commercial transactions. Though the Restatement is non-binding, it is frequently cited by courts in explaining their reasoning in interpreting contractual disputes.

The assignment of contracts for sale of goods is governed by the Uniform Commercial Code (the "UCC") in § 2-209 Modification, Rescission and Waiver .

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Section 302

302 Recording of Assignment Documents [R-07.2015]

37 cfr 3.11 documents which will be recorded..

(a) Assignments of applications, patents, and registrations, and other documents relating to interests in patent applications and patents, accompanied by completed cover sheets as specified in § 3.28 and § 3.31 , will be recorded in the Office. Other documents, accompanied by completed cover sheets as specified in § 3.28 and § 3.31 , affecting title to applications, patents, or registrations, will be recorded as provided in this part or at the discretion of the Director.
(b) Executive Order 9424 of February 18, 1944 (9 FR 1959, 3 CFR 1943-1948 Comp., p. 303) requires the several departments and other executive agencies of the Government, including Government-owned or Government-controlled corporations, to forward promptly to the Director for recording all licenses, assignments, or other interests of the Government in or under patents or patent applications. Assignments and other documents affecting title to patents or patent applications and documents not affecting title to patents or patent applications required by Executive Order 9424 to be filed will be recorded as provided in this part.
(c) A joint research agreement or an excerpt of a joint research agreement will also be recorded as provided in this part.

37 CFR 3.58 Governmental registers.

(a) The Office will maintain a Departmental Register to record governmental interests required to be recorded by Executive Order 9424. This Departmental Register will not be open to public inspection but will be available for examination and inspection by duly authorized representatives of the Government. Governmental interests recorded on the Departmental Register will be available for public inspection as provided in § 1.12 .
(b) The Office will maintain a Secret Register to record governmental interests required to be recorded by Executive Order 9424. Any instrument to be recorded will be placed on this Secret Register at the request of the department or agency submitting the same. No information will be given concerning any instrument in such record or register, and no examination or inspection thereof or of the index thereto will be permitted, except on the written authority of the head of the department or agency which submitted the instrument and requested secrecy, and the approval of such authority by the Director. No instrument or record other than the one specified may be examined, and the examination must take place in the presence of a designated official of the Patent and Trademark Office. When the department or agency which submitted an instrument no longer requires secrecy with respect to that instrument, it must be recorded anew in the Departmental Register.

37 CFR Part 3 sets forth Office rules on recording assignments and other documents relating to interests in patent applications and patents and the rights of an assignee.

37 CFR 3.11(c) provides that the Office will record a joint research agreement or an excerpt of a joint research agreement.

302.01 Assignment Document Must Be Copy for Recording [R-08.2012]

37 cfr 3.24 requirements for documents and cover sheets relating to patents and patent applications..

(a) For electronic submissions: Either a copy of the original document or an extract of the original document may be submitted for recording. All documents must be submitted as digitized images in Tagged Image File Format (TIFF) or another form as prescribed by the Director. When printed to a paper size of either 21.6 by 27.9 cm (8 1/2 inches by 11 inches) or 21.0 by 29.7 cm (DIN size A4), the document must be legible and a 2.5 cm (one-inch) margin must be present on all sides.
(b) For paper or facsimile submissions: Either a copy of the original document or an extract of the original document must be submitted for recording. Only one side of each page may be used. The paper size must be either 21.6 by 27.9 cm (8 1/2 inches by 11 inches) or 21.0 by 29.7 cm (DIN size A4), and in either case, a 2.5 cm (one-inch) margin must be present on all sides. For paper submissions, the paper used should be flexible, strong white, non-shiny, and durable. The Office will not return recorded documents, so original documents must not be submitted for recording.

The United States Patent and Trademark Office will accept and record only a copy of an original assignment or other document. See MPEP § 317 . The document submitted for recordation will not be returned to the submitter. If the copy submitted for recordation is illegible, the recorded document will be illegible. Accordingly, applicants and patent owners should ensure that only a legible copy is submitted for recordation.

302.02 Translation of Assignment Document [R-08.2012]

37 cfr 3.26 english language requirement..

The Office will accept and record non-English language documents only if accompanied by an English translation signed by the individual making the translation.

The assignment document, if not in the English language, will not be recorded unless accompanied by an English translation signed by the translator.

302.03 Identifying Patent or Application [R-07.2015]

37 cfr 3.21 identification of patents and patent applications..

An assignment relating to a patent must identify the patent by the patent number. An assignment relating to a national patent application must identify the national patent application by the application number (consisting of the series code and the serial number; e.g., 07/123,456). An assignment relating to an international patent application which designates the United States of America must identify the international application by the international application number; e.g., PCT/US2012/012345. An assignment relating to an international design application which designates the United States of America must identify the international design application by the international registration number or by the U.S. application number assigned to the international design application. If an assignment of a patent application filed under § 1.53(b) of this chapter is executed concurrently with, or subsequent to, the execution of the patent application, but before the patent application is filed, it must identify the patent application by the name of each inventor and the title of the invention so that there can be no mistake as to the patent application intended. If an assignment of a provisional application under § 1.53(c) of this chapter is executed before the provisional application is filed, it must identify the provisional application by the name of each inventor and the title of the invention so that there can be no mistake as to the provisional application intended.

The patent or patent application to which an assignment relates must be identified by patent number or application number unless the assignment is executed concurrently with or subsequent to the execution of the application but before the application is filed. Then, the application must be identified by the name(s) of the inventors, and the title of the invention. If an assignment of a provisional application is executed before the provisional application is filed, it must identify the provisional application by name(s) of the inventors and the title of the invention.

The Office makes every effort to provide applicants with the application numbers for newly filed patent applications as soon as possible. It is suggested, however, that an assignment be written to allow entry of the identifying number after the execution of the assignment. An example of acceptable wording is:

“I hereby authorize and request my attorney, (Insert name), of (Insert address), to insert here in parentheses (Application number , filed ) the filing date and application number of said application when known.”

302.04 Foreign Assignee May Designate Domestic Representative [R-10.2019]

35 u.s.c. 293 nonresident patentee; service and notice..

Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the Eastern District of Virginia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.

37 CFR 3.61 Domestic representative.

If the assignee of a patent, patent application, trademark application or trademark registration is not domiciled in the United States, the assignee may designate a domestic representative in a document filed in the United States Patent and Trademark Office. The designation should state the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the application, patent or registration or rights thereunder.

An assignee of a patent or patent application who is not domiciled in the United States may, by written document signed by such assignee, designate a domestic representative. The designation of domestic representative should always be submitted to the Office as a paper separate from any assignment document. The designation of a domestic representative should be clearly labeled “Designation of Domestic Representative” and it will be entered into the record of the appropriate application or patent file. The designation must be signed in accordance with 37 CFR 1.33(b) .

302.05 Address of Assignee [R-08.2012]

The address of the assignee may be recited in the assignment document and must be given in the required cover sheet. See MPEP § 302.07 .

302.06 Fee for Recording [R-10.2019]

37 cfr 3.41 recording fees..

(a) All requests to record documents must be accompanied by the appropriate fee. Except as provided in paragraph (b) of this section, a fee is required for each application, patent and registration against which the document is recorded as identified in the cover sheet. The recording fee is set in § 1.21(h) of this chapter for patents and in § 2.6(b)(6) of this chapter for trademarks.
(1) The document does not affect title and is so identified in the cover sheet (see § 3.31(c)(2)); and
(2) The document and cover sheet are either: Faxed or electronically submitted as prescribed by the Director, or mailed to the Office in compliance with § 3.27 .

The recording fee set in 37 CFR 1.21(h) is charged for each patent application and patent identified in the required cover sheet except as provided in 37 CFR 3.41(b) . If the request to record a document is submitted electronically, the fee is set forth in 37 CFR 1.21(h)(1) , currently at $0. If the request to record a document is not submitted electronically (i.e., is submitted on paper or via facsimile), the applicable fee is set forth in 37 CFR 1.21(h)(2) . Customers should check the current fee schedule on the Office website before submitting documents for recordation. See MPEP §§ 302.08 - 302.10 for additional information regarding the acceptable ways to submit documents for recordation.

302.07 Assignment Document Must Be Accompanied by a Cover Sheet [R-10.2019]

37 cfr 3.28 requests for recording..

Each document submitted to the Office for recording must include a single cover sheet (as specified in § 3.31 ) referring either to those patent applications and patents, or to those trademark applications and registrations, against which the document is to be recorded. If a document to be recorded includes interests in, or transactions involving, both patents and trademarks, then separate patent and trademark cover sheets, each accompanied by a copy of the document to be recorded, must be submitted. If a document to be recorded is not accompanied by a completed cover sheet, the document and the incomplete cover sheet will be returned pursuant to § 3.51 for proper completion, in which case the document and a completed cover sheet should be resubmitted.

37 CFR 3.31 Cover sheet content.

(1) The name of the party conveying the interest;
(2) The name and address of the party receiving the interest;
(3) A description of the interest conveyed or transaction to be recorded;
(i) For trademark assignments and trademark name changes: Each trademark registration number and each trademark application number, if known, against which the Office is to record the document. If the trademark application number is not known, a copy of the application or a reproduction of the trademark must be submitted, along with an estimate of the date that the Office received the application; or
(ii) For any other document affecting title to a trademark or patent application, registration or patent: Each trademark or patent application number or each trademark registration number or patent against which the document is to be recorded, or an indication that the document is filed together with a patent application;
(5) The name and address of the party to whom correspondence concerning the request to record the document should be mailed;
(6) The date the document was executed;
(i) Place a symbol comprised of letters, numbers, and/or punctuation marks between forward slash marks ( e.g. /Thomas O’Malley III/) in the signature block on the electronic submission; or
(ii) Sign the cover sheet using some other form of electronic signature specified by the Director.
(8) For trademark assignments, the entity and citizenship of the party receiving the interest. In addition, if the party receiving the interest is a domestic partnership or domestic joint venture, the cover sheet must set forth the names, legal entities, and national citizenship (or the state or country of organization) of all general partners or active members that compose the partnership or joint venture.
(b) A cover sheet should not refer to both patents and trademarks, since any information, including information about pending patent applications, submitted with a request for recordation of a document against a trademark application or trademark registration will become public record upon recordation.
(1) Indicate that the document relates to a Government interest; and
(2) Indicate, if applicable, that the document to be recorded is not a document affecting title (see § 3.41(b) ).
(d) Each trademark cover sheet required by § 3.28 seeking to record a document against a trademark application or registration should include, in addition to the serial number or registration number of the trademark, identification of the trademark or a description of the trademark, against which the Office is to record the document.
(e) Each patent or trademark cover sheet required by § 3.28 should contain the number of applications, patents or registrations identified in the cover sheet and the total fee.
(f) Each trademark cover sheet should include the citizenship of the party conveying the interest.
(1) Identify the document as a “joint research agreement” (in the space provided for the description of the interest conveyed or transaction to be recorded if using an Office-provided form);
(2) Indicate the name of the owner of the application or patent (in the space provided for the name and address of the party receiving the interest if using an Office-provided form);
(3) Indicate the name of each other party to the joint research agreement party (in the space provided for the name of the party conveying the interest if using an Office-provided form); and
(4) Indicate the date the joint research agreement was executed.
(h) The assignment cover sheet required by § 3.28 for a patent application or patent will be satisfied by the Patent Law Treaty Model International Request for Recordation of Change in Applicant or Owner Form, Patent Law Treaty Model International Request for Recordation of a License/ Cancellation of the Recordation of a License Form, Patent Law Treaty Model Certificate of Transfer Form or Patent Law Treaty Model International Request for Recordation of a Security Interest/ Cancellation of the Recordation of a Security Interest Form, as applicable, except where the assignment is also an oath or declaration under § 1.63 of this chapter. An assignment cover sheet required by § 3.28 must contain a conspicuous indication of an intent to utilize the assignment as an oath or declaration under § 1.63 of this chapter.

Each assignment document submitted to the Office for recording must be accompanied by a cover sheet as required by 37 CFR 3.28 . The cover sheet for patents or patent applications must contain:

(A) The name of the party conveying the interest;
(B) The name and address of the party receiving the interest;
(C) A description of the interest conveyed or transaction to be recorded;
(D) Each patent application number or patent number against which the document is to be recorded, or an indication that the document is filed together with a patent application;
(E) The name and address of the party to whom correspondence concerning the request to record the document should be mailed;
(F) The date the document was executed; and
(G) The signature of the party submitting the document.

For applications filed on or after September 16, 2012, if the assignment document is also intended to serve as the required oath or declaration, the cover sheet must also contain a conspicuous indication of an intent to utilize the assignment as the required oath or declaration under 37 CFR 1.63 . See 37 CFR 3.31(h) .

If the document submitted for recordation is a joint research agreement or an excerpt of a joint research agreement, the cover sheet must clearly identify the document as a "joint research agreement" (in the space provided for the description of the interest conveyed if using Form PTO-1595). The date the joint research agreement was executed must also be identified. The cover sheet must also identify the name(s) of the owner(s) of the application or patent (in the space provided for the name and address of the party receiving the interest if using Form PTO-1595). The name(s) of every other party(ies) to the joint research agreement must also be identified (in the space provided for the name of the party conveying the interest if using Form PTO-1595).

Each patent cover sheet should contain the number of patent applications or patents identified in the cover sheet and the total fee.

Examples of the type of descriptions of the interest conveyed or transaction to be recorded that can be identified are:

(A) assignment;
(B) security agreement;
(C) merger;
(D) change of name;
(E) license;
(F) foreclosure;
(H) contract; and
(I) joint research agreement.

Cover sheets required by 37 CFR 3.28 seeking to record a governmental interest must also (1) indicate that the document relates to a governmental interest and (2) indicate, if applicable, that the document to be recorded is not a document affecting title.

A patent cover sheet may not refer to trademark applications or registrations.

Form PTO-1595, Recordation Form Cover Sheet, may be used as the cover sheet for recording documents relating to patent(s) and/or patent application(s) in the Office.

Form PTO-1595. Recordation Form Cover Sheet for Patents

302.08 Mailing Address for Submitting Assignment Documents [R-08.2012]

37 cfr 3.27 mailing address for submitting documents to be recorded..

Documents and cover sheets submitted by mail for recordation should be addressed to Mail Stop Assignment Recordation Services, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, Virginia 22313-1450, unless they are filed together with new applications.

37 CFR 3.27 sets out how documents submitted for recording should be addressed to the Office. In order to ensure prompt and proper processing, documents and their cover sheets should be addressed to the Mail Stop Assignment Recordation Services, Director of the U.S. Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450, unless they are filed together with new applications. Requests for recording documents which accompany new applications should be addressed to the Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-1450.

302.09 Facsimile Submission of Assignment Documents [R-11.2013]

Assignments and other documents affecting title may be submitted to the Office via facsimile (fax). See the USPTO website or MPEP § 1730 for the facsimile number. This process allows customers to submit their documents directly into the automated Patent and Trademark Assignment System and receive the resulting recordation notice at their fax machine. The customer’s fax machine should be connected to a dedicated line because recordation notices will be returned automatically to the sending fax number through the Patent and Trademark Assignment System. If the Office system is unable to complete transmission of the recordation notice, the notice will be printed and mailed to the sender by U.S. Postal Service first class mail. Recorded documents will not be returned with the “Notice of Recordation.”

Any assignment-related document for patent matters submitted by facsimile must include:

(A) an identified application or patent number;
(B) one cover sheet to record a single transaction; and
(C) payment of the recordation fee by a credit card (use of the Credit Card form, PTO-2038 (see MPEP § 509 ), is required for the credit card information to be kept separate from the assignment records) or a USPTO Deposit Account.

The following documents cannot be submitted via facsimile:

(A) Assignments submitted concurrently with newly filed patent applications;
(B) Documents with two or more cover sheets (e.g., a single document with one cover sheet to record an assignment, and a separate cover sheet to record separately a license relating to the same property); and
(C) Requests for “at cost” recordation services.

The date of receipt accorded to an assignment document sent to the Office by facsimile transmission is the date the complete transmission is received in the Office. See MPEP § 502.01 . The benefits of a certificate of transmission under 37 CFR 1.8 are available.

If a document submitted by fax is determined not to be recordable, the entire document, with its associated cover sheet, and the Office “Notice of Non-Recordation” will be transmitted via fax back to the sender. Once corrections are made, the initial submission, amended, may then be resubmitted by mailing the corrected submission to the address set forth in 37 CFR 3.27 . Timely resubmission will provide the sender with the benefit of the initial receipt date as the recordation date in accordance with 37 CFR 3.51 .

The Patent and Trademark Assignment System assigns reel and frame numbers and superimposes recordation stampings on the processed and stored electronic images. Accordingly, copies of all recorded documents will have the reel and frame numbers and recordation stampings.

302.10 Electronic Submission of Assignment Documents [R-10.2019]

(i) Place a symbol comprised of letters, numbers, and/or punctuation marks between forward slash marks ( e.g. /Thomas O’ Malley III/) in the signature block on the electronic submission; or

37 CFR 1.4 Nature of correspondence and signature requirements.

(i) The S-signature must consist only of letters, or Arabic numerals, or both, with appropriate spaces and commas, periods, apostrophes, or hyphens for punctuation, and the person signing the correspondence must insert his or her own S-signature with a first single forward slash mark before, and a second single forward slash mark after, the S-signature ( e.g., /Dr. James T. Jones, Jr./); and
(ii) A patent practitioner (§ 1.32(a)(1) ), signing pursuant to §§ 1.33(b)(1) or 1.33(b)(2) , must supply his/her registration number either as part of the S-signature, or immediately below or adjacent to the S-signature. The number (#) character may be used only as part of the S-signature when appearing before a practitioner’s registration number; otherwise the number character may not be used in an S-signature.
(A) Presented in printed or typed form preferably immediately below or adjacent the S-signature, and
(B) Reasonably specific enough so that the identity of the signer can be readily recognized.
(3) Electronically submitted correspondence . Correspondence permitted via the Office electronic filing system may be signed by a graphic representation of a handwritten signature as provided for in paragraph (d)(1) of this section or a graphic representation of an S-signature as provided for in paragraph (d)(2) of this section when it is submitted via the Office electronic filing system.
(i) Certification as to the paper presented. The presentation to the Office (whether by signing, filing, submitting, or later advocating) of any paper by a party, whether a practitioner or non-practitioner, constitutes a certification under § 11.18(b) of this subchapter. Violations of § 11.18(b)(2) of this subchapter by a party, whether a practitioner or non-practitioner, may result in the imposition of sanctions under § 11.18(c) of this subchapter. Any practitioner violating § 11.18(b) of this subchapter may also be subject to disciplinary action. See § 11.18(d) of this subchapter.
(ii) Certification as to the signature. The person inserting a signature under paragraph (d)(2) or (d)(3) of this section in a document submitted to the Office certifies that the inserted signature appearing in the document is his or her own signature. A person submitting a document signed by another under paragraph (d)(2) or (d)(3) of this section is obligated to have a reasonable basis to believe that the person whose signature is present on the document was actually inserted by that person, and should retain evidence of authenticity of the signature. Violations of the certification as to the signature of another or a person’s own signature as set forth in this paragraph may result in the imposition of sanctions under § 11.18(c) and (d) of this chapter.
(5) Forms. The Office provides forms for the public to use in certain situations to assist in the filing of correspondence for a certain purpose and to meet certain requirements for patent applications and proceedings. Use of the forms for purposes for which they were not designed is prohibited. No changes to certification statements on the Office forms ( e.g., oath or declaration forms, terminal disclaimer forms, petition forms, and nonpublication request forms) may be made. The existing text of a form, other than a certification statement, may be modified, deleted, or added to, if all text identifying the form as an Office form is removed. The presentation to the Office (whether by signing, filing, submitting, or later advocating) of any Office form with text identifying the form as an Office form by a party, whether a practitioner or non-practitioner, constitutes a certification under § 11.18(b) of this chapter that the existing text and any certification statements on the form have not been altered other than permitted by EFS-Web customization.

Assignments and other documents affecting title may be submitted to the Office via the Office’s Electronic Patent Assignment System (EPAS). See the USPTO website at http://epas.uspto.gov for additional information regarding EPAS.

Any assignment related document submitted by EPAS must include:

(A) an identified application or patent number; and
(B) one cover sheet to record a single transaction which cover sheet is to be completed on-line.

The fee set in 37 CFR 1.21(h)(1) for recording an electronically submitted document is currently $0. Customers should check the current fee schedule on the Office website before submitting documents for recordation. If a recordation fee is required, see MPEP § 509 for detailed information pertaining to the payment of fees.

For an assignment document filed electronically, the signature of the person who signs the cover sheet must comply with 37 CFR 3.31(a)(7) or 37 CFR 1.4(d)(2) .

The date of receipt accorded to an assignment document sent to the Office by EPAS is the date the complete transmission is received in the Office.

If a document submitted by EPAS is determined not to be recordable, the entire document, with its associated cover sheet, and the Office "Notice of Non-Recordation" will be transmitted via fax back to the sender if possible. Once corrections are made, the initial submission, as amended, may then be resubmitted by mailing the corrected submission to the address set forth in 37 CFR 3.27 . Timely submission will provide the sender with the benefit of the initial receipt date as the recordation date in accordance with 37 CFR 3.51 .

301.01-Accessibility of Assignment Records
302.01-Assignment Document Must Be Copy for Recording
302.02-Translation of Assignment Document
302.03-Identifying Patent or Application
302.04-Foreign Assignee May Designate Domestic Representative
302.05-Address of Assignee
302.06-Fee for Recording
302.07-Assignment Document Must Be Accompanied by a Cover Sheet
302.08-Mailing Address for Submitting Assignment Documents
302.09-Facsimile Submission of Assignment Documents
302.10-Electronic Submission of Assignment Documents
303-Assignment Documents Not Endorsed on Pending Applications
304‑305-[Reserved]
306.01-Assignment of an Application Claiming the Benefits of a Provisional Application
307-Issue to Non-Applicant Assignee
308-Issue to Applicant
309-Restrictions Upon Employees of U.S. Patent and Trademark Office
310-Government License Rights to Contractor-Owned Inventions Made Under Federally Sponsored Research and Development
311-Filing of Notice of Arbitration Awards
312-[Reserved]
313-Recording of Licenses, Security Interests, and Documents Other Than Assignments
314-Certificates of Change of Name or of Merger
315-Indexing Against a Recorded Certificate
316-[Reserved]
317.01-Recording Date
317.02-Correction of Unrecorded Returned Documents and Cover Sheets
317.03-Effect of Recording
318-Documents Not to be Placed in Files
319-[Reserved]
320-Title Reports
321‑322-[Reserved]
323.01(a)-Typographical Errors in Cover Sheet
323.01(b)-Typographical Errors in Recorded Assignment Document
323.01(c)-Assignment or Change of Name Improperly Filed and Recorded by Another Person Against Owner’s Application or Patent
323.01(d)-Expungement of Assignment Records
324-Establishing Right of Assignee To Take Action in Application Filed Before September 16, 2012
325-Establishing Right of Assignee To Take Action in Application Filed On or After September 16, 2012

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Factoring , Newsletters

THE NOTICE OF ASSIGNMENT: A REFRESHER COURSE

Allen J. Heffner Nov 20, 2023

The Notice of Assignment is probably the single most important document for a Factor. Understanding what needs to be included in the Notice of Assignment, how to send it, and who to send it to can mean the difference between getting paid and not. Despite the fact that every Factor is (or should be) familiar with legal requirements relating to Notices of Assignment, we still find that many of our factoring clients who end up in litigation make basic mistakes relating to their Notices of Assignment. The article focuses on what information needs to be included in the Notice, who the Notice should be sent to, and how the Notice should be delivered.

What needs to be included in the Notice of Assignment?

To be effective, there is certain information that must be included in the Notice of Assignment. The Uniform Commercial Code (“UCC”) requires that the notice must:

Notify the Account Debtor that the amount due or to become due has been assigned;
Notify the Account Debtor that payment is to be made to the Factor;
Reasonably identify the rights assigned; and
Be signed by the Factor or its client.

The Notice of Assignment should also include a remittance address so the Account Debtor is informed how and in what manner the Factor should be paid.

Additionally, while not explicitly required under the current version of the UCC, Factors should include language in their Notice of Assignment that: (i) the Client has assigned all of its present and future accounts receivable to Factor; (ii) the Factor holds a first priority security interest in all of the client’s accounts receivable; and (iii) all payments owing to the client must be paid to the Factor.

Who should the Notice of Assignment be sent to?

Notices of Assignment should not be sent directly to individuals with an Account Debtor. Sending the Notice to a specific individual may lead to issues relating to the authority of that individual to receive documents on behalf of the Account Debtor. Moreover, Factors that direct Notices of Assignment directly to individuals open themselves up to arguments that the Notices of Assignment was not properly delivered. For instance, our clients that have sent Notices of Assignment to individuals have ended up in situations where the individual to whom the Notice of Assignment was addressed no longer worked with the Account Debtor or the individual was located at a different office and the Notice of Assignment was not sent to the proper location. To be safe and to avoid unnecessary issues, Factors should send the Notice of Assignment to the Account Debtor’s accounts payable department.

Additionally, some states have specialized definitions for what constitutes “notice” on behalf of a company. If there is any question as to where a Notice of Assignment should be sent, Factors should check with their attorney to determine where these should be sent.

How should the Notice of Assignment be delivered?

The crucial issue for the enforceability of a Notice of Assignment is proof of receipt by the Account Debtor, not proof of delivery. Therefore, it is good business practice to send the Notice of Assignment either certified mail or other method that provides for proof of delivery.

Many of our clients have asked about whether it is proper to deliver the Notice of Assignment via e-mail asking the Account Debtor to confirm receipt or with “read receipts” turned on. Some Factors prefer this method because it is more cost efficient.

While sending Notices of Assignment via e-mail is enforceable, we would not recommend it as a general business practice. Sending the Notice in this manner requires delivering the Notice to a specific individual, which we have discussed above can be problematic. Sometimes officers and directors of companies have assistants or other personnel manage their e-mail accounts, raising the possibility that the individual to whom the Notice was sent, never saw the e-mail, even though the e-mail was “read.”

Last, there is no requirement that the Notice be signed by the Account Debtor and returned to the Factor. Often, we see our client’s Notice include a “confirmation of receipt” line for the Account Debtor to sign and return. Sometimes, the Factor will have proof of delivery to the Account Debtor but the Notice was not signed and returned by the Account Debtor. This adds unnecessary ambiguity as to whether the Notice was actually received by the Account Debtor. Therefore, we instruct our clients not to include such requests for proof of receipt.

Who should send the Notice of Assignment?

Some of our clients that have had bad experiences with Account Debtors after delivering a Notice of Assignment have chosen to have their Client be the one to deliver the Notice of Assignment. There is no legal requirement as to whether the Factor or the Client is the correct party to deliver the Notice of Assignment. However, we recommend the Factor be the one to deliver the Notice of Assignment. This way, the Factor is in complete control of the contents of the Notice of Assignment, how it is delivered, and receives confirmation of its delivery. We have been in situations in which the Factor allowed the Client to deliver the Notice of Assignment, but the Client did not deliver the Notice of Assignment in accordance with the law, leading to avoidable litigation.

Should a Factor respond to an Account Debtors questions regarding a Notice of Assignment?

Absolutely, yes. If requested by an Account Debtor, pursuant to the UCC, a Factor must furnish reasonable proof of the assignment for the Notice of Assignment to be valid. Too often we see situations in which requests are made or questions are posed by Account Debtors that the Factor ignores, thinking that because the Account Debtor received the Notice of Assignment, nothing else needs to be done. The Factor should respond to the Account Debtor and provide reasonable proof of the assignment. These communications can also provide invaluable insight as to the relationship between the client and the Account Debtor, how and when payments will be made, and can provide the Account Debtor a sense of trust with the Factor.

A Notice of Assignment is crucial for Factors because it provides legal protection, establishes priority of interest, prevents confusion, facilitates legal recourse, and enables effective communication with Account Debtors. Without this notice, Factors may encounter difficulties in asserting their rights and collecting payments from Account Debtors, potentially jeopardizing the financial transaction.

Bruce Loren and Allen Heffner of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. For over 25 years, Mr. Loren has focused his practice on construction law and factoring law. Mr. Loren has achieved the title of “Certified in Construction Law” by the Florida Bar. The Firm represents factoring companies in a wide range of industries, including construction, regarding all aspects of litigation and dispute resolution. Mr. Loren and Mr. Heffner can be reached at [email protected] or [email protected] or 561-615-5701

Bruce E. Loren · Michael I. Kean · Allen J. Heffner · Kyle W. Ohlenschlaeger · Frank Sardinha, III · Lucia E. DeFilippo

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Assignments: why you need to serve a notice of assignment

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips from our Banking & Finance team.

[email protected]
T: +44 (0)370 733 0605
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Candidate List of substances of very high concern for Authorisation

(published in accordance with article 59(10) of the reach regulation).

Authentic version: Only the Candidate List published on this website is deemed authentic. Companies may have immediate legal obligations following the inclusion of a substance in the Candidate List on this website including in particular Articles 7, 31 and 33 of the REACH Regulation.
Numerical identifiers : Each candidate list entry covers both anhydrous and hydrated forms of a substance. The CAS number shown in an entry is typically for the anhydrous form. Hydrated forms of the substance identified by other CAS numbers are still within the scope of the entry.
Other numerical identifiers : For those entries with "-" in the EC number and CAS number columns, a non-exhaustive inventory of EC and/or CAS Registry numbers describing substances or groups of substances considered to fall within the scope of the Candidate List entry is included, where practicably possible. This information can be accessed through the "Details" button of the selected entry.

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IMAGES

FREE 11+ Notice of Assignment Samples in PDF
Notice Of Assignment Template
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FREE 56+ Notice Forms in PDF
Notice of Assignment Template [Free PDF]
004_19907 033US00_Notice of Recordation of Assignment

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| MA/PG ASSIGNMENT NOTICE PUBLISHED 2024
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BBC's Assignment: Document the Truth about Stolen Gold.mp4

COMMENTS

What is a Notice of Assignment? (Invoice Factoring)
A Notice of Assignment (NOA) is a document that factoring companies send to the end-customers of their clients. This document informs end-customers of the factoring financing relationship. Clients usually have some concerns when they learn that a factor will notify their customers. This article addresses these concerns and explains how the NOA ...
Factoring Paperwork: Notice of Assignment
The Notice of Assignment is a vital form of protection for a factoring company. It protects the factor in case the business owner (the factor's client) receives the payment instead of the factoring company. In a best-case scenario, the notice serves to inform every party in a factoring transaction of their rights and responsibilities.
What is a notice of assignment?
An assignment takes place when one party is holding a right to property, claims, bills, lease, etc., of another party and wishes to pass it along (or sell it) to a third party. As complicated as that sounds, it really isn't. Strangely enough, many assignments can be made under the law without immediately informing, or obtaining the permission,… Read More »
What Is A Notice Of Assignment In The Trucking Industry?
A notice of assignment is a contractual document, supplied to both the carrier and the customer, that tells the customer to pay the factoring company, not the carrier. The notice of assignment is an essential piece of paperwork, one of the documents you'll have to keep on file as you establish a factoring relationship.
Factoring Notice of Assignment (NOA): What You Should Know
A Notice of Assignment (NOA) is one of the most important parts of your factoring relationship. Find out what an NOA is and why it matters here. ... This process involves the NOA, a pivotal document in factoring transactions. Essentially, NOA is a simple letter informing customers that the payment terms have changed and future payments should ...
Free Assignment Agreement Template
An assignment agreement is a legal document that transfers rights, responsibilities, and benefits from one party (the "assignor") to another (the "assignee"). You can use it to reassign debt, real estate, intellectual property, leases, insurance policies, and government contracts. ... Provide notice of the assignment to the non ...
What is a Notice of Assignment?
A factoring contract can contain many parts, but few are as important as the Notice of Assignment. When a company is factoring their invoices, what they are agreeing to do is assign their accounts receivables to their factoring company, who in turn has the right to collect payments for those invoices. The Notice of Assignment is the document ...
Notice of Assignment Explained
A Notice of Assignment (NOA) for accounts receivables is an essential legal document in the financial world. It serves as a formal notification that a business's rights to certain accounts receivable have been transferred or assigned to another party. This third party, often a lending institution or a factoring company, then has the right to ...
What is a Notice of Assignment in Factoring Transactions?
A notice of assignment is a document that notifies clients that a factoring company has acquired ownership of their accounts receivable, or invoices, from the original business. The notice's objective is to alert customers to the ownership change and specify who should receive payments.
Notice of Assignment Meaning in Factoring
A notice of assignment (NOA) is a document that notifies your customers that your factoring company has the right to collect payments on invoices. In a factoring relationship, a business sells its invoices to a third-party factoring company, which then collects payment on them. An NOA notifies your customers of this change in structure.
The Importance of a Notice of Assignment in Factoring
The Notice of Assignment lets the debtor know that the factoring company will be managing the invoice. The document contains the essential notice that the factoring company is now the agency with the right to the payment. The Notice of Assignment includes all new payment information, including bank details and full instructions on fulfilling ...
What Is a Factoring Notice of Assignment?
For example, a notice of assignment (NOA) is actually a very common document utilized in the trucking industry. It's ideal for companies using a factoring transaction service because a factoring fee will pay them on the load in advance. From there, the factoring company will be responsible for collecting payment for the service from the customer.
The Role of a Notice of Assignment in Invoice Factoring
A Notice of Assignment is a document that is used to notify your customers that you have sold accounts receivable to a factor. ... A Notice of Assignment ("NOA") is a letter sent by the factoring company ("factor") to your customers (aka "account debtors") notifying them that the ownership of your accounts receivable, or invoices ...
A REFRESHER COURSE: THE NOTICE OF ASSIGNMENT
The Notice of Assignment is probably the single most important document for a Factor. Understanding what needs to be included in the Notice of Assignment, how to send it, and who to send it to can ...
Notice of Assignment
by Practical Law Commercial Transactions. Maintained • USA (National/Federal) A form letter that an assignee of an agreement uses to provide notice to the non-assigning party to the agreement of the assignment. This Standard Document has integrated notes with important explanations and drafting tips.
What is a Notice of Assignment in Factoring?
Components of a NOA Document. Contact Porter Capital for a Factoring Quote. A Notice of Assignment (NOA) is a letter from a third party to your customers, notifying them that there was a change of invoice.
Notice Of Assignment Upload
Description Notice Assignment. An assignment is a transfer of rights that a party has under a contract to another person, called an assignee. The assigning party is called the assignor. If the obligor (person obligated to pay) is notified that there has been an assignment and that any money due must be paid to the assignee, the obligor's ...
What is a Notice of Assignment (NOA) in Trucking?
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 ...
What is a Notice of Assignment in Factoring and Who Does it Protect?
A Notice of Assignment is commonly used in business including construction. Learn the NOA definition and how it protects all parties. (865) 670-2345 ... Being a formal document, the Notice of Assignment states that a contract or obligation has been transferred from one party (the assignor) to another (the assignee). ...
Contract Assignment Agreement
Contract Assignment Agreement. Last revision 01/31/2024. Formats Word and PDF. Size 2 to 3 pages. 4.8 - 105 votes. Fill out the template. This Contract Assignment Agreement document is used to transfer rights and responsibilities under an original contract from one Party, known as the Assignor, to another, known as the Assignee. The Assignor ...
302-Recording of Assignment Documents
37 CFR 3.11 Documents which will be recorded. (a) Assignments of applications, patents, and registrations, and other documents relating to interests in patent applications and patents, accompanied by completed cover sheets as specified in § 3.28 and § 3.31 , will be recorded in the Office. Other documents, accompanied by completed cover ...
THE NOTICE OF ASSIGNMENT: A REFRESHER COURSE
The Notice of Assignment is probably the single most important document for a Factor. Understanding what needs to be included in the Notice of Assignment, how to send it, and who to send it to can mean the difference between getting paid and not. Despite the fact that every Factor is (or should be) familiar with legal requirements relating to ...
Assignments: why you need to serve a notice of assignment
The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.
PDF Notice of Assignment
NOTICE OF ASSIGNMENT. PLEASE TAKE NOTICE that, on [Effective Date] , ESCO Inc., ("ESCO") will assign its Contract with ____________ (Customer), dated __(original date of contract)______, to [Name of New ESCO] , as provided for in that Contract. You have the right to either select a different supplier or return to full service with your ...
Superior Court Forms
04-16-2024. 3. Case Information Cover Sheet & Case Assignment Area Form - Probate & Guardianship. Word. PDF. 04-16-2024. 4. Case Information Cover Sheet & Case Assignment Area Form - Juvenile & Mental Health. Word.
Notice of Filing of Complaint and Assignment; International Express
Notice of Filing of Complaint and Assignment; International Express Trucking, Inc., Complainant v. COSCO Shipping Lines Co., Ltd. and COSCO Shipping (North America) Inc., as Agent for COSCO Shipping Lines Co., Ltd., Respondents ... Notice Document Citation: 89 FR 42469 Page: 42469-42470 (2 pages) Agency/Docket Number: Docket No. 24-20 Document ...
Candidate List of substances of very high concern for Authorisation
Numerical identifiers: Each candidate list entry covers both anhydrous and hydrated forms of a substance. The CAS number shown in an entry is typically for the anhydrous form. Hydrated forms of the substance identified by other CAS numbers are still within the scope of the entry.
PDF 'This assignment is exempt from recent selection criteria' and
12/7/22 TASK ORDER ENVIRONMENTAL COMPLIANCE SOIL & GROUNDWATER (advertised via legal notice, this assignment is exempt from recent selection criteria) 11/28/22 Construction Engineering & Inspection (Road & Bridge) for Project 92-692. 11/28/22 Construction Engineering & Inspection (Road & Bridge) for Project 170-3557.

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What Is A Notice Of Assignment In The Trucking Industry?

Struggling with slow payments from shippers and brokers? Keep cash flowing the simple way with Bobtail factoring.

Defining The Notice Of Assignment In Trucking

Why is a notice of assignment important?

How A Notice Of Assignment Benefits Shippers And Carriers

Simplifying Notices Of Assignment

Factoring Notice of Assignment (NOA): Everything You Need to Know

Assignment of Debt Explained

What Does Notice of Assignment Mean?

What is a Notice of Assignment in Factoring?

The Role of Notice of Assignment for Cash Flow

The Importance of a Notice of Assignment in Factoring

Elements of a Factoring NOA Document

How Do Factoring Companies Notify Your Customers

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Assignment Agreement Template

What Is an Assignment Agreement?

Partnership Interest

Review the Contract Terms

Check for Anti-Assignment Clauses

Determine Assignability

Get Consent from the Other Party (if Required)

Prepare an Assignment Agreement

Include Original Contract Information

Execution of the Assignment Agreement

Notice to the Other Party

File the Assignment

Communicate with Third Parties

Keep Copies for Records

Step 1 – List the Assignor’s and Assignee’s Details

Step 2 – Provide Original Contract Information

Step 3 – State the Consideration

Step 4 – Provide Any Terms and Conditions

Step 5 – Obtain Signatures

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What is a Notice of Assignment?

A factoring contract can contain many parts, but few are as important as the Notice of Assignment.

Why do my customers need to know that I’m factoring?

Why does my factoring company receive payments for invoices that weren’t factored?

What happens if I receive a payment that should have been sent to my factoring company?

Notice of Assignment in Factoring in the U.S

Meaning of Notice of Assignment

Importance of Notice of Assignment

Impact of Notice of Assignment on Businesses

Information in a Notice of Assignment

What Happens When an Obligor Doesn’t Receive Notice of Agreement

How to Receive Notice of Agreement

Requirements for a Notice of Assignment

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What is a Notice of Assignment?

What Is a Factoring Notice of Assignment?

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Why Is a Notice of Assignment Important?

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