As part of the initial set-up process for a disclosed invoice finance facility, your business is required to complete a Notice of Assignment (NOA) process.  Its purpose is to inform your customer of the financial arrangement and assignment of the invoice to the financier who will now have rights to payment.  This is a one-time setup and no further notification is required with your customer throughout the life of the facility. 

 

Recap on disclosed invoice finance

Before we dig deeper into the NOA process, let’s go through an overview of both disclosed and confidential invoice finance facilities.

 

What are the main differences?

A confidential (a.k.a non-notified) facility is when the financier does not require that your customers be notified of the financing arrangement.  Financiers consider a confidential facility higher risk and therefore facility limits are usually lower, and discount (interest) rates higher.

 

A disclosed (a.k.a. notified) facility is when your customer is notified of the financing arrangement.  As this is deemed a lower-risk facility, you are often offered higher facility limits, and discount (interest) rates are usually lower.

 

Similarities between confidential vs. disclosed facilities

Regardless of facility type, all invoices under the facility are assigned to the financier as well as rights to payment pertaining to those invoices.   

For any payments received for non-funded invoices, the financier will passthrough funds to your business bank account within 24 hours of receiving its remittance. 

 

 

What is in the Notice of Assignment letter?

Every financier will have their own version of an NOA letter. With InvoiceInterchange, an NOA template will be provided for you to complete and send it on to your customer. The template essentially informs your customer of the financial arrangement and the new bank account details to which the customer will pay future invoices to.

The NOA will contain the following information:

  • InvoiceInterchange is financing your receivables.
  • The relevant invoices have been assigned to InvoiceInterchange.
  • Payment must be made to an InvoiceInterchange bank account.

 

Your customer will then confirm and acknowledge the assignment and new payment instructions by returning an Acknowledgement of the Notice of Assignment. 

 

How to send the NOA?

Larger companies generally are very familiar with an NOA and have a standard process in place.  Typically, the contact point is your customer’s Finance or Accounts Receivable department.  It can take as soon as one day to a couple of weeks to complete the NOA process – this is very much dependent on how quickly your customer acknowledges the NOA. 

 

Do you have questions?  Speak to one of our team members with no obligations.

 

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