Find Me Funders
Non-notification factoring
Also called confidential factoring, non-notification, undisclosed factoring.
Factoring arranged so the client's customers are not told the invoices have been sold, with payments still routed to a lockbox the factor controls.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
In standard factoring the factor sends a notice of assignment and the customer redirects payment. In a non-notification arrangement no notice goes out. Remittance instructions still change, but to a lockbox or account that looks like the client's own - often held in the client's name with the factor holding control - so nothing on the invoice reveals the arrangement.
Factors offer it selectively. Without notification, the account debtor has no instruction to pay anyone but the client, which weakens the factor's position if payments get diverted. So it is reserved for clients with stronger financials, longer track records and customers whose payment behaviour is predictable, and it prices above notification factoring.
Businesses want it for commercial reasons: a large customer that reads factoring as distress, an industry where it signals weakness, or simply not wanting the conversation.
Where this one catches people
Confidential does not mean unfiled. The factor still records a UCC-1 against your receivables, and it is public - any other funder, any customer running a search, and any bank you later approach will see it. The confidentiality is about what you tell your customers, not about what is on the record.
Where you will meet this term
Read next
Non-notification factoring — common questions
What does non-notification factoring mean?
Factoring arranged so the client's customers are not told the invoices have been sold, with payments still routed to a lockbox the factor controls.
Where does non-notification factoring catch people out?
Confidential does not mean unfiled. The factor still records a UCC-1 against your receivables, and it is public - any other funder, any customer running a search, and any bank you later approach will see it. The confidentiality is about what you tell your customers, not about what is on the record.
Is non-notification factoring the same as an interest rate?
No. It is a multiplier applied once to the amount funded, with no time dimension. An interest rate is charged per unit of time on a balance that changes.
Which products does non-notification factoring apply to?
Invoice Financing.
Is there a worked example of non-notification factoring?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside non-notification factoring?
Invoice factoring, Lockbox, Notice of assignment, Recourse, Reserve.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.