When you factor your invoices, you are essentially selling them to the factoring company. The factoring company then collects the payment from your customer on your behalf. In order for the factoring company to have the legal right to collect payment from your customer, you will need to sign a notice of assignment.
A notice of assignment in trucking is a document that assigns the right to collect payment on an invoice to the factoring company. The notice of assignment also assigns the right to receive any future payments on the invoice to the factoring company.
Why is a Notice of Assignment Important?
A notice of assignment in trucking is important because it protects the factor’s (or the organization to which the receivables have been assigned) interest in the receivables. The notice of assignment also allows the factor to perfect its security interest in the receivables, and provides notice to the debtor that the receivables have been assigned and that payments should be made to the factor.
Another reason why a notice of assignment is important is that it allows the factor to take action against the debtor in the event of a default on the receivables. Without a notice of assignment, the factor would not have any legal recourse against the debtor.
The notice of assignment also helps introduce the factoring company to the debtor. This is because the debtor will now be dealing with the factoring company instead of the business that assigned the receivables.
What is Covered in a Notice of Assignment?
When a trucking company factors their receivables, they are selling their invoices to a factoring company at a discount in order to receive immediate cash. The factoring company then becomes the receivable’s owner and has the right to collect payment from the debtor. In order to protect their investment, the factoring company will send a notice of assignment to the debtor, informing them that they now owe payment to the factoring company, not the trucking company.
The notice of assignment usually includes the following information:
-The name and contact information of the factoring company
-The name and contact information of the trucking company
-The invoice number or numbers that have been assigned to the factoring company
-The amount of the invoice or invoices that have been assigned
-The due date or dates of the invoice or invoices
-The name and contact information of the debtor
-A statement informing the debtor that they now owe payment to the factoring company instead of the trucking company
-The factoring company’s terms and conditions for payment as well as payment details
Sending a notice of assignment to the debtor protects the factoring company’s investment and ensures that they will be paid for the invoices that they have purchased. It also allows the trucking company to focus on its business instead of chasing down payments from debtors.
Notice of Assignment Examples
It is common for businesses in the trucking industry to use factoring as a way to finance their operations. In order to secure funding, companies will often sign over their accounts receivable to the factor. This means that the factor has the right to collect payments on behalf of the company. When this occurs, the factor will typically send a notice of assignment to the company’s customers.
The notice of assignment informs the customer that the invoice has been assigned to the factor and provides instructions on how to make payment. It is important to include all relevant information in the notice, such as the amount owed, the due date, and the mailing address or website where payment should be sent.
Below is an example of a notice of assignment that a company might send to its customers:
Date
Customer LLC
123 Main Street
Suite 200
Anytown, USA 99999
Dear Sir/Madam
RE NOTICE OF ASSIGNMENT.
Dear Customer,
We are writing to inform you that your invoice number 12345 has been assigned to ABC Factoring Company. Please remit payment for the invoice in full to ABC Factoring Company at the following address:
ABC Factoring Company
123 Main Street
Suite 200
Anytown, USA 99999
You can also make payments online at www.abcfactoring.com. Please be sure to reference your invoice number when making a payment. Kindly note you are liable for any misdirected payment, and as such we strongly advise you to take note of the change in payment details.
If you have any questions, please contact our office at 555-555-1234.
Thank you for your prompt attention to this matter.
Sincerely,
Your Company Name
An example of a notice of assignment sent by a factoring company to the debtors:
Date
Customer LLC
123 Main Street
Suite 200
Anytown, USA 99999
Dear Debtor,
RE NOTICE OF ASSIGNMENT.
According to the agreement between your company and our client – the Assignor – we hereby inform you that all the Assignor’s rights, title and interest in the account receivable described below were assigned and transferred to us, effective as of the date of this notice. All payments should now be made payable to and mailed to our address:
New Factor’s Name
123 Main Street
Suite 200
Anytown, USA 99999
The Assigned Account Receivable:
Description of Invoice: Invoice Number:
Amount: Due Date:
From now on, you should direct all your questions and requests concerning the above-mentioned invoice to us.
Should you have any questions, please do not hesitate to contact us.
Sincerely,
The Factor’s Name.
Conclusion
As you can see, a notice of assignment is a simple but important document that companies in the trucking industry often use when factoring their invoices. The notice informs the debtor that the invoice has been assigned to the factor and provides instructions on how to make payment. By including all relevant information in the notice, such as the amount owed, rate confirmation, the due date, and the mailing address or website where payment should be sent, companies can help ensure that their customers make timely payments and avoid confusion. Advanced Commercial Capital, we are experts in factoring for the trucking industry and can help you get the funding you need to grow your business. Contact us today to learn more.