Notice of Assignment: Who the Broker Must Pay

What the NOA tells the broker

A notice of assignment is the factor's instruction to the account debtor, which in trucking is usually the broker. It says the carrier has assigned the invoices, and payments on those invoices go to the factor. It is not a suggestion and it is not a courtesy copy of the factoring contract. Once the broker has a valid notice, the broker's payment duty runs to the factor.

Read the notice for four things before anyone argues about a check. The legal name of the carrier. The USDOT or MC number. The factor's name and the address or account where payment goes. The date it takes effect, and whether it covers all invoices or only invoices the factor has funded. A notice that is missing the name or the payment destination is a bad instruction. A notice that is complete is the instruction the broker follows.

The fee the factor charges for the advance is not on this page. Carriers who want the percent, the reserve, and the aging schedule should use the fee guide. Mixing the price into the payment instruction is how people "just this once" deposit a check and call it a fee dispute. It is not a fee dispute. It is the wrong payee.

Pay the factor, not the MC, after a valid notice

After a valid notice, the broker pays the factor. Paying the motor carrier does not finish the debt if the assignment was effective. The factor can still demand the same invoice from the broker. The broker then has a paid carrier and an unpaid factor, which is the double payment the notice exists to prevent. Accounts-payable habits, "we always pay the carrier we know," do not override a notice sitting in the file.

The carrier's side of that rule is just as hard. You do not tell the broker to pay you because the factor is slow, or because a fuel bill is due, or because the notice was inconvenient. If the factor has not released the invoice, the broker's check with your name on it is a problem, not a windfall. Call the factor before you touch it. The faster-pay guide explains why people factor in the first place. It does not create an exception for a single load.

Brokers should train the person who cuts freight checks, not only the person who sets up packets. A setup folder with a notice, and a payment run that ignores the folder, is how this loss happens. Put the payee on the carrier record and do not let a rate confirmation override it.

What "paid the driver" does not cure

"We paid the driver" is the sentence brokers use when the factor calls. It does not cure a payment made to the wrong party after notice. The driver is not a separate payee from the motor carrier. Paying the owner-operator, paying the company, or paying a comcheck to the truck are all payments to the carrier side. None of them is a payment to the factor.

Do not split the invoice to "help." A partial payment to the carrier and a partial payment to the factor is still a payment the notice did not authorize, and it produces a short-pay the factor will charge back. If money went to the wrong place, the correction is a repayment to the factor and a recovery from the person who received it, under the contract, not a shrug.

Carriers who are leased to another MC have a second version of this mess. The notice has to match the entity that billed the broker. If the lease-on carrier's authority is the one on the rate confirmation, a notice in the owner-operator's personal name is the wrong payee even if that person drove the truck. Match the billed party.

A second NOA when you switch factors

Switching factors is normal. Doing it by signing the new contract on Friday and emailing a second notice the same hour, while the first factor's notice is still in every broker's portal, is how one load is claimed twice. The order is a release from the first factor, a termination of the first notice, then the new notice. The cancel-the-contract page is the exit sequence. This page only says: do not leave two notices live.

Tell every broker who has the first notice that it is withdrawn, and send the new one only after that withdrawal is real. "We sent an email" is not a release if the first factor still shows the account as open. Ask the first factor for a written release that names your legal entity and says which invoices they still own. Brokers should not guess. If two notices are in the file, pay neither party until one notice is clearly dead. Paying both is worse. Paying the louder caller is not a control.

A broker that receives a second notice should ask, in writing, whether the first factor released the carrier. Save the answer. A carrier that cannot produce the release should not be surprised when the broker holds the freight bill.

The load that was delivered before the notice

Invoices for loads delivered before the notice usually stay with the factor that funded them. A new factor does not inherit the old factor's advances by magic. Read the old contract and the new one. Some agreements assign every account, present and future, until a release. Some assign only invoices submitted for funding. The sentence in your contract controls. Do not assume a switch is retroactive, and do not assume it is only forward.

If the old factor advanced the money, the broker still pays the old factor even if you have a new logo on the rate confirmation. Sending that invoice to the new factor is asking the new factor to fund an invoice that is already sold. That is a second advance on one load. It ends in a chargeback, a fight between factors, or both.

Make a list on the day you switch: invoices already funded, invoices delivered but not yet submitted, and invoices not yet delivered. The first list stays. The second list needs a written answer from the old factor before anyone else funds it. The third list can move after the new notice is the only notice. Write the list. Do not do it from memory on a Friday afternoon.

How to read an NOA before you sign it

Before you sign a factoring contract, read the notice the factor will send. It should use the legal name on the authority, not a nickname and not a dispatcher's DBA. How to get MC authority is where that legal name is supposed to be settled. If the notice, the W-9, the insurance certificate, and SAFER do not match, fix them before the first broker is notified. A broker who sees a mismatch should not pay either party until the names match. Paying the "closest" name is how the money goes to the wrong entity.

Also read whether the notice claims all accounts or only purchased invoices, whether brokers may still pay you on unpurchased loads, and where to send a misdirected check. Those sentences are the operating rules. The fee schedule can be attractive and the notice can still be a blanket assignment you did not understand. You are allowed to ask the factor to limit the notice to purchased invoices if that is the deal you think you are buying. Get that limit in the notice itself, not in a salesperson's email that the broker will never see.

The check follows that record. Everything else on the settlement is a different article.

Frequently Asked Questions