The one document behind retail-invoice funding — what a Notice of Assignment is, why the law backs it, and exactly what happens to a Costco payment after one is signed.
Nico Mottesi · CEO, Spring
Last edited 7 min read
If you sell to a large retailer and you have ever looked into working capital, you have run into three letters: NOA. It stands for Notice of Assignment, and it is the one document that makes funding against retail invoices work. It is also the document brands ask us about most, usually in a slightly worried tone.
This post explains what a NOA is, why it exists, why the law stands behind it, and exactly what happens to a retailer's payment after one is signed. We will use an imaginary coffee company and a very real retailer, Costco, as the example. Nothing here is legal advice; it is how the mechanism actually works, in the words we use every day.
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.
Thirty days is the contract. In practice, between receiving, the invoice-approval cycle and the payment run, cash tends to arrive later than that. Meanwhile Ridgeline has to buy green coffee for the next order, pay the roaster and the co-packer, and keep its own people paid. The order that should be the best news of the year turns into a month of watching the bank balance.
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 simply the letter that tells Costco about it. 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 and broader concept: the assignment of receivables. Any business can assign what it is owed. Banks, factors and trade financiers have relied on this 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.
What makes it work is that the law backs it. Under Article 9 of the Uniform Commercial Code, adopted in every U.S. state, once a customer receives notice that a receivable has been assigned and that payment should go to the assignee, the customer can only discharge that invoice by paying the assignee. If Costco acknowledged the notice and then paid Ridgeline directly anyway, Costco would still owe Spring. That is not a lever we expect to pull. It is the reason the arrangement is safe for everyone in it.
Why a brand should care that its lender is protected
Because protection is what gets priced.
A lender that can rely on the retailer's payment arriving where it was directed is underwriting the retailer's credit, and Costco's credit is excellent. Without that reliance, the lender is underwriting a young brand's balance sheet, which is a very different risk with a very different price. The enforceability of the assignment is what lets us advance most of an invoice on the day it is issued, at a cost that would be impossible for an unsecured loan to a two-year-old company.
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.
What happens, step by step
Here is the full life of a NOA, from draft to release, as Ridgeline would experience it.
Spring drafts the notice
Once Ridgeline is approved, we prepare the NOA. 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; there is nothing to fill in.
The brand and Spring sign it
The notice is signed by both parties: Ridgeline as the assignor and Spring as the assignee. It is signed electronically and usually takes a few minutes.
It goes to the right desk at the retailer
We send the signed notice to Costco's accounts payable, specifically the vendor-maintenance team, the group that owns remit-to details. Every large retailer has this process; Costco, Walmart, Target, UNFI and KeHE each have their own form and turnaround. We know them, we submit it, we follow up, and we confirm.
The retailer acknowledges and re-points the payment
When Costco processes the notice, the remit-to on Ridgeline's vendor account changes to the collection account named in the NOA: a dedicated account Spring holds for that relationship. From then on, every payment Costco makes on that account goes there. Ridgeline keeps invoicing exactly as it always has.
Money arrives and is applied
When Costco pays, the funds land in the collection account and are credited to Ridgeline's account with Spring. What happens next depends on the funding product Ridgeline signed for; the policies are below.
Release
When Ridgeline has no outstanding balance and decides it no longer needs funding, Spring releases the notice. 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.
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.
Bridge funding. Repayment is a fixed share of what comes in rather than a whole invoice. As payments land, that share is applied to the balance and the rest is remitted to you, on a daily rhythm.
Whatever the product, the rule is the same. We take what is owed under the agreement, and the rest goes to you promptly. Every application is shown in your Spring account line by line, so at any moment you can see which payment came in, what was applied and what was sent on.
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. Retailers process these constantly; funding growth this way is the norm for consumer brands, not the exception.
- Not paperwork per invoice. One notice per retailer relationship.
Questions we hear
Will Costco think we are in trouble? No. The vendor-maintenance team sees a remit-to update. It is routine, and it says nothing about your business beyond the fact that you have a financing partner, which most of their vendors do.
How long does acknowledgement take? It depends on the retailer's process, typically days to a couple of weeks. 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 remit-to goes back to your account.
The short version
A Notice of Assignment tells your retailer to send payment for your invoices to Spring instead of to you. It is a standard, enforceable instrument that lets us fund most of an invoice the day it is issued, because the law makes the retailer's payment reliable. When the money arrives, it settles what you owe under your agreement 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 and want to see what this looks like for your invoices, get started or talk to the team.