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Notice of assignment NOA
Also called assignment notice, NOA letter.
The written notice telling a customer that its invoices have been assigned to a factor and that payment must now go to the factor to count as payment.
Drafted with AI assistance and checked by a person. Its factual claims were verified against the sources listed at the end, by Find Me Funders research desk.
What it means
The factor sends it on onboarding, usually on the client's letterhead or jointly, naming the accounts affected and giving the new remittance instructions. It is the operative step that changes where money must go.
Its legal effect is the part people underestimate. Under Article 9 of the UCC as adopted in most states, once an account debtor has received an authenticated notification of assignment, it discharges its obligation only by paying the assignee. Paying the original supplier after that generally does not discharge the debt, which means the customer can be required to pay twice. That is why customers take NOAs seriously and why some large buyers have formal processes for handling them.
The notice does not strip the customer of defences. Claims and setoffs that had accrued before the notification generally survive, which is why factors underwrite the account debtor relationship and not just the invoice.
Receivables owed by the federal government follow a separate process under the Assignment of Claims Act, with its own notice and acknowledgement requirements.
Where this one catches people
A customer that keeps paying you after receiving an NOA has usually not discharged its debt - and the money sitting in your account belongs to the factor. Spending it is a misdirected payment, a breach of the factoring agreement, and in most agreements a repurchase trigger and an event of default at once. Route it back the same day and tell the factor before they find it.
Where you will meet this term
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Sources and checks
Every figure on this page traces to a document someone read, on a date. Where a check is past its review date it says so rather than passing as current.
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After notification of assignment the account debtor discharges its obligation only by paying the assignee, so paying the original supplier does not discharge the debt
definition"the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor."
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Defences and claims accruing before the account debtor receives notification survive against the assignee
definition"the rights of an assignee are subject to: (1) all terms of the agreement between the account debtor and assignor and any defense or claim in recoupment ...; and (2) any other defense or claim ... which accrues before the account debtor receives a notification of the assignment."
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Receivables owed by the federal government run through a separate statutory process rather than an ordinary notice of assignment
definitionAn "assignment" means "a transfer or assignment of any part of a claim against the United States Government or of an interest in the claim; or ... the authorization to receive payment for any part of the claim".
Notice of assignment — common questions
What does notice of assignment mean?
The written notice telling a customer that its invoices have been assigned to a factor and that payment must now go to the factor to count as payment.
Where does notice of assignment catch people out?
A customer that keeps paying you after receiving an NOA has usually not discharged its debt - and the money sitting in your account belongs to the factor. Spending it is a misdirected payment, a breach of the factoring agreement, and in most agreements a repurchase trigger and an event of default at once. Route it back the same day and tell the factor before they find it.
Is notice of assignment the same as an interest rate?
Notice of assignment is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does notice of assignment apply to?
Invoice Financing, Asset-Based Lending.
Is there a worked example of notice of assignment?
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 notice of assignment?
Invoice factoring, Lockbox, Non-notification factoring, Obligor, Receivable.
Has this definition been checked?
Yes. Its claims were verified against the sources listed at the end of this page, and the reviewer is named.
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.