Are My Customers Notified When I Factor?

Once you have decided to factor your invoices, you may wonder what the next steps are. Many clients also ask how invoice factoring will impact their own customers or current invoicing processes. These questions tend to include if a customer will be notified that their invoice has been factored, who the customer pays, and more. Although some of your processes may be slightly different, we believe that invoice factoring is never something that should be inconvenient for you or your customers.

After you have decided to work with an invoice factoring company, you will decide which of your customer’s invoices you would like to factor. This could be every customer or you could decide to only factor certain customers.

At this point, you may be wondering how invoice factoring works when it comes to your customers. Will they be aware that their invoice has been factored? Who will they pay when their invoice is due?

While many clients have these concerns, we like to assure them that invoice factoring should be a task that is smooth for both you and for your customers.


Will My Customer Be Notified?

The majority of factoring companies will notify your customers when their invoices have been factored. If they do not, it is called non-notification factoring. This type of factoring is not very common throughout the industry and is typically only used under very special circumstances.

For every other occasion, your customer will be notified when their invoice has been factored. This is typically done by the factoring company themselves through a notice of assignment, or NOA.

When an invoice is first sold to a factoring company, the company will contact your customer by phone or email to notify them of the invoice you have submitted to the factoring company.

This phone call will verify terms, amount, and make sure you customer has no problem paying the factoring company for your invoice. This verification process can be done with every invoice you sell, depending on the Factoring company and depending on the documentation given to the factor as proof of service rendered or proof of product received.

Additionally, with the first invoice purchased, the factoring company will submit a written notice of assignment form that explains the factoring relationship between you and your factoring company and requests that factored invoices are to be paid to the factoring company. This is also signed by you so your customer has written documentation that shows you have approved this.

From this point forward, all new customers factored will get a notice of assignment sent with new billing along with our assignment stamp on every invoice. This stamp notifies your customer that the invoice has been factored and lets them know that payment should be remitted to the factoring company. It also lets your customer know that if any issues arise from the invoice, the factoring company needs to be notified immediately.



In some cases, a written acknowledgment notice of assignment will also be sent to your customer in addition to the stamped invoices. This is typically done in cases that need notice other than just a stamped invoice or when there is no invoice to stamp.

For example, some customers use a reverse billing system where your customer generates the invoices instead of you sending them your invoice or your customer uses a Portal to approve and pay invoices.

In this case, an acknowledged notice of assignment would be necessary to let your customer know the steps they need to take to fulfill the invoice along with satisfying the acknowledgment of assignment of all proceeds to the Factor.

Unless some type of issue arises with payment from either you or your customer, the NOA is usually the only communication your customers will receive from a factoring company.

Selling your customer’s invoices should not typically impact them since they are paying the same amount of money for an agreed upon service. The notice of assignment just serves to make them aware that their invoice has been factored and they should remit payment to the factoring company.


Who Will My Customer Pay?

Once an invoice has been factored, your customers will send payment for that invoice (and any other factored invoices) to the factoring company. We ask that you create your own invoices, even if the invoice is being factored. This is because we do not want you to lose identity with your customer.

After you have sold your invoice to a factoring company, the process for factored invoices is as follows:

  • You submit your invoice and any required documents to the factoring company
  • The factoring company places the NOA stamp on the invoice
  • The factoring company sends out the invoices to your customers
  • Your customers pay the factoring company for the total amount of the invoice

Remember that you’ve already received your portion of the total amount of the invoice from the factoring company when you factored that invoice.

If, for whatever reason, your customer does pay you instead of the factoring company, it is usually an easy fix. Simply send the payment to the factoring company directly without cashing it. Once the factoring company has received the payment, they will process accordingly.

There are a few exceptions to this particular system depending on how each individual company’s billing system works. For example, some companies prefer to email their invoices while others invoice from a portal. However, the overall steps remain the same regardless of how the invoice is delivered to your customer.



Some businesses may be worried that a factoring company will notify their customers when they factor the customer’s invoices. They might be concerned that their processes may change or their customers will not want their invoices to be sold. However, this should not be the case for you or for your customers.

Invoice factoring is very commonplace in today’s business world. Your customer is still paying you the same amount they would without the invoice being factored, so this should not impact their business at all.

Receiving money from a factoring company shows you have strong credit and a successful cash flow, so neither you nor your customer should be concerned when the customer is notified that their invoice has been factored.


Are you interested in learning more about factoring companies and which one is right for your business? Take a look at our guide on how to choose the right factoring company here:

How Do I Choose a Factoring Company?