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How Non-Notification Factoring Works
In traditional invoice factoring the invoice factoring company (or “factor”) generally has direct contact with the customers of the factoring client in order to generate approvals and in the course of collecting payment on invoices factored.
Non-notification factoring minimizes contact between the factoring company and the factoring client’s customers, often through the use of white-labeled forms which maintain the client’s brand in customer invoices, statements and correspondence. When the customer pays factored invoices, those payments are then addressed to a unique lock-box or paid electronically into a deposit account belonging to the factoring company, though still branded to the factoring client. For the customer, this creates a seamless experience that protects and reinforces the factoring clients brand.
Take a closer look at the non-notification factoring process by comparing these two scenarios:
Traditional Invoice Factoring The factoring client requests approval from the factoring company relative to a specific customer account. The factoring company conducts due diligence to establish the credit-worthiness of the customer. The client generates customer invoices and sends them to the customer, and then submits those invoices for factoring. The factoring company contacts the customer for verification of the invoice. Instead of remitting payment for the invoice to the factoring client, the customer agrees to repay the invoice amount to the factoring company directly. |
Non-Notification Factoring The factoring client requests approval from the factoring company for non-notification factoring relative to a specific customer account. The factoring company conducts due diligence to establish the credit-worthiness of the customer. The client (or factoring company on instructions from the client) generates customer invoices on the client’s brand stationary and sends them to the customer. The customer remits payment for the invoice which is directed to a factoring company-managed lock-box or electronic deposit account. |