The document behind retail-invoice funding: what a Notice of Assignment is, why retailers treat it as routine, and exactly what happens to a Costco payment after one is signed.
Last edited 5 min read
Most of the brands we fund had never heard of a Notice of Assignment before we sent them one. There is no reason they would have: it only appears when a business is funded against its invoices, and it usually lands in an inbox before anyone has explained it. It is also the document that makes funding against retail invoices possible, and the one brands ask us about most, usually in a slightly worried tone.
This post covers what a NOA is and exactly what happens to a retailer's payment after one is signed. The example is an imaginary coffee company selling to a real retailer, Costco. It is not legal advice.
The situation every brand recognizes
Meet Ridgeline Coffee. Ridgeline roasts in Oregon, just landed a regional Costco listing, and ships its first pallets this month. Costco receives the goods and Ridgeline sends an invoice for $12,000, due in thirty days.
The contract says thirty days. In practice, receiving, invoice approval and the retailer's payment schedule push the cash out past that. Meanwhile Ridgeline has to buy green coffee for the next order, pay the roaster and the co-packer, and make payroll. The largest order it has ever won leaves it short of cash for a month.
That gap between shipping and getting paid is the problem Spring exists to solve. The NOA is how we solve it safely.
What a Notice of Assignment actually is
An invoice is a promise. Costco owes Ridgeline $12,000 on a date. That promise is an asset, a receivable, and like most assets it can be transferred to someone else.
When Spring funds Ridgeline against the Costco invoice, Ridgeline assigns that receivable to Spring. The Notice of Assignment is the letter that tells Costco. Stripped of the legal formatting, it says:
This vendor has assigned its receivables to Spring. From now on, please send payment on this vendor account to the account below.
That is the whole document. It does not change the price Costco pays, the terms it pays on, the product on the shelf, or the relationship between the buyer and the brand. It changes one line in Costco's vendor file: the remit-to, meaning where the money is sent.
Assignment is the bigger idea
The NOA is one instance of a much older idea: the assignment of receivables. Banks, factors and trade financiers have relied on it for well over a century, long before anyone called it fintech. Every major retailer has a desk that processes these notices, because a large share of the vendors on its shelves finance their growth this way.
It works because the law backs it. Once Costco has the notice, paying Spring is the only way it can settle Ridgeline's invoices; if it paid Ridgeline directly anyway, it would still owe Spring.1 That is not a lever we expect to pull. It is what makes the arrangement safe, and it is what gets priced: a lender that can count on Costco's payment is underwriting Costco's credit rather than a young brand's balance sheet, which is why we can advance most of an invoice the day it is issued at a cost no unsecured loan could match. So the NOA is not a hurdle we put in front of brands. It is the reason the pricing works, for us and for you.
How a retailer pays a brand today
Before the notice, it helps to see the payment it changes. Nothing in this section involves Spring. It is Ridgeline, Costco, one invoice and one payment, the way it works for every vendor on the shelf.
When everything goes to plan. Ridgeline ships, sends Costco an invoice for $12,000 on net-30 terms, and waits. On day 30 Costco pays the invoice in full, straight into Ridgeline's bank account. This is the ordinary case, and the one the contract describes.
When the retailer takes a deduction. Retailers routinely pay less than the invoice: a chargeback for a shortage, a late delivery, a promotional allowance. Costco records a $600 deduction against the $12,000 invoice, and on day 30 Ridgeline receives $11,400. The invoice is settled, and the brand either accepts the deduction or disputes it with the retailer.
When the payment is late. Day 30 comes and goes with nothing in the account. The invoice is overdue, the goods are already on the shelf, and there is little to do but wait. The $12,000 lands on day 45. The two weeks in between are the brand's problem: payroll and the next order do not wait for the payment run.
The same payment, with a notice in place
Now the same invoice with a Notice of Assignment on file. The parties are the same two plus Spring, and the notice changes exactly one thing: where Costco's payment goes. Ridgeline still ships and invoices $12,000 on net-30 terms. Costco's vendor file now says to remit to a collection account Spring holds for the relationship, so the payment that used to go to Ridgeline's bank goes there instead.
With that in place, Spring advances 70% of the invoice, $8,400, to Ridgeline on day one. On day 30 Costco pays the $12,000 to the collection account. Spring settles the $8,400 advance and its 1% fee of $120, and remits the remaining $3,480 to Ridgeline. Ridgeline never pays Spring, and Costco never pays Ridgeline directly while the notice stands.
Every step, in order
Seven steps, from the first pallet to the last letter, as the detailed reference. The figure follows the step you are reading; tap a step to see it.
The pallets go out and an invoice for $12,000 follows, due in thirty days. Costco's vendor file says where that payment goes: Ridgeline's own bank account. Nothing about this step changes with Spring; it is simply where the story starts.
It names the brand, the retailer, the vendor number Costco knows Ridgeline by, and the collection account payments should be sent to. Ridgeline reviews it and signs as assignor, Spring signs as assignee, electronically, in a few minutes.
The vendor-maintenance team inside Costco's accounts payable owns remit-to details. Costco, Walmart, Target, UNFI and KeHE each have their own form and turnaround; Costco's is the CSMP portal and two factor letters. We know them, we submit it, we follow up, and we confirm.
The remit-to on Ridgeline's vendor account changes to a dedicated collection account Spring holds for that relationship. Ridgeline keeps invoicing exactly as it always has. This is the whole point of the document, and the only line in Costco's file it touches.
With the notice acknowledged, Spring can count on Costco's payment, so it advances 70% of the invoice, $8,400, into Ridgeline's account the same day. The month-long wait for cash is over before it starts.
Costco's $12,000 lands in the collection account and is applied line by line in Ridgeline's Spring account: the $8,400 advance is settled, the 1% fee of $120 is taken, and the remaining $3,480 is remitted to Ridgeline as soon as the payment clears. The policies below say what happens in each product.
When Ridgeline has no outstanding balance and no longer needs funding, a release letter goes to the same desk at Costco and the remit-to returns to Ridgeline's own bank account.
What happens to the money
This is the part brands ask about most, so it deserves its own section.
Every dollar that lands in the collection account is credited to your account with Spring and then applied under the policy of the product you signed for. There are two things that can happen to it: it pays down what you owe, or it is remitted to you. Which, and in what proportion, is fixed by the agreement rather than decided case by case, and the policy regularly calls for money to be sent on to you: whatever is left once an advance is settled, and every payment on an invoice we did not fund, in full.
Invoice factoring. A retailer payment first settles what is outstanding on that invoice, the advance plus the fee, and the remainder is remitted to you. In Ridgeline's case: Costco pays $12,000; Spring had advanced $8,400 on day one and charges a 1% fee of $120; Ridgeline receives the remaining $3,480 as soon as the payment clears.
Purchase order financing. The same mechanics, applied to the purchase-order advance. The retailer's payment repays what Spring put into producing and shipping the order, and the remainder is remitted.
Every application is shown in your Spring account line by line: which payment came in, what was applied and what was sent on. The NOA changes where money arrives, not what you are entitled to.
What a NOA is not
- Not a lien on your company. It covers receivables from one retailer, nothing else.
- Not a change to your terms with the retailer. Prices, payment terms and the product are untouched.
- Not a signal of distress. Costco's vendor-maintenance team sees a remit-to update, one of many it processes; most of the vendors on its shelves have a financing partner.
- Not paperwork per invoice. One notice per retailer relationship.
Questions we hear
How long does acknowledgement take? Days to a couple of weeks, depending on the retailer. We track it and tell you the moment it is confirmed.
What if the retailer pays us directly by mistake? It happens, usually right after a remit-to change. Forward the payment to Spring; the agreement asks for it, and it is the one thing that keeps a clean setup clean.
Can we stop? Yes. Settle the balance, tell us, and we release the notice.
The short version
A Notice of Assignment tells your retailer to send payment for your invoices to Spring instead of to you. That is what lets us fund most of an invoice the day it is issued. When the money arrives, it settles what you owe and the rest is remitted to you. One document, one desk at the retailer, and your cash stops waiting on the payment run.
If you sell into Costco, Walmart, Target or any of the big distributors, get started or talk to the team.
1 The rule is Article 9 of the Uniform Commercial Code, adopted in every U.S. state: once a customer has notice that a receivable has been assigned and that payment should go to the assignee, only payment to the assignee discharges the debt.