01
Most process it and move on
For an accounts payable team a notice of assignment is a payee change. It is entered, the invoice is paid to the new details, and nothing further happens.
Guide
Whether the customer is told, and what it changes.
It is the first decision in receivables funding and the one commonly made on instinct. The instinct is usually to stay confidential, and it is not always right.
MS
Matt Stiles Editor
Published 8 September 2026 Last reviewed 8 September 2026 Read time 10 min
The short version
Five lines that frame the decision.
- Disclosure is a line on the invoice. A notice of assignment directing payment to the funder, and a change of bank details. That is what customers actually see.
- Confidentiality costs money. A funder that cannot verify with the customer takes more risk, charges more and advances less. Discretion has a price and it is worth knowing what it is.
- Sector decides most cases. In construction, transport, labour hire and recruitment it is unremarkable. Elsewhere it is conspicuous.
- Customers react less than expected. Accounts payable teams process notices of assignment routinely. The reaction feared is usually the owner’s rather than the customer’s.
- Indicative only. Every figure here is illustrative. Actual terms come from the funder after assessment.
What disclosure is
What a customer actually receives.
A notice of assignment is a short paragraph on the invoice stating that the debt has been assigned and that payment should be made to the funder. Alongside it, the remittance details change. That is the whole of what a customer sees at the point the arrangement begins.
From then on, statements and reminders come from the funder rather than from the business. The goods or services, the pricing, the terms and the account manager all stay exactly as they were, and for most customers the practical change is a new payee in their system.
Businesses imagine a letter announcing financial difficulty. What arrives is an administrative change of the kind accounts payable teams process constantly, and the gap between those two pictures is where most of the anxiety about disclosure lives.
On the invoice
A notice of assignment
In the ledger
New bank details
From the funder
Statements and reminders
Everything else
Unchanged
Both sides
What each option is actually buying.
Disclosed
Cheaper, larger, and it collects.
The funder can verify invoices directly with the customer and receives payment itself, so its risk is lower. That shows up as a lower fee, a higher advance rate and frequently a larger facility on the same ledger.
It also brings the collections function, which is worth real money in a business that is not collecting well. A third party with no relationship to protect follows a process regardless of how anyone feels about making the call.
The cost is that customers know, and that it cannot be undone quietly. Reverting to a confidential arrangement later means telling customers again, which is more visible than starting confidentially would have been.
Confidential
Discreet, and it costs.
Nothing is visible to customers. The business invoices, collects and manages its relationships exactly as before, and the funder sits entirely behind the arrangement.
The funder compensates for the reduced visibility through price, through a lower advance rate, and through reporting. Confidential facilities ordinarily carry heavier verification requirements, periodic audits and stricter eligibility rules.
It also leaves the collections function where it was, which is an advantage where that function is capable and a cost where it is not. A confidential facility does nothing to make customers pay faster.
The trade, priced
What confidentiality typically costs on the same ledger.
Illustrative on stated assumptions. The direction of each row is the reliable part rather than the specific figures.
| Disclosed | Confidential | |
|---|---|---|
| Indicative discount fee | Lower | Higher |
| Indicative advance rate | 80% to 90% | 70% to 85% |
| Verification | Direct with the customer | Through documents and audits |
| Collections | Included | Stays with the business |
| Eligibility rules | More generous | Stricter |
| Reporting | Moderate | Heavier |
Indicative comparison on stated assumptions. Any particular facility is priced by its funder after assessment.
How customers react
Four things that actually happen.
Drawn from how notices of assignment function in practice rather than from what businesses expect before sending one.
02
Some ask a question
A relationship manager may ask what has changed. An honest answer, that the business has arranged funding to support growth, is ordinarily the end of the conversation.
03
A few have policies
Some contracts restrict assignment of receivables and some large buyers object as a matter of policy. Where a significant customer does, the fundable ledger shrinks and it is worth knowing beforehand.
04
Occasionally it helps
In sectors where factoring is normal, being on a facility signals that the business has funding behind it and can take on larger work, which is the opposite of the feared reaction.
The step worth taking
Call the largest customers before the notice arrives.
Where disclosure is chosen, a short call to the three or four largest accounts before the first notice goes out changes how it lands entirely. It is a two-minute conversation explaining that funding has been arranged and that remittance details will change, and it converts a surprise into an administrative heads-up. Businesses that skip it spend considerably longer answering questions afterwards, and the questions are asked in a less comfortable order.
The sector question
Where disclosure carries no signal at all.
In New Zealand construction, subcontractors on facilities are common enough that main contractors deal with notices of assignment as routine paperwork. The same is true in transport, in labour hire and in recruitment, where the mismatch between weekly wages and monthly billing makes receivables funding close to standard practice.
In professional services, in manufacturing selling to a small number of long-standing customers, and in any sector where the supplier relationship is personal and the customer base is small, it is conspicuous. That does not make it wrong, and it does mean the conversation with each customer matters more.
The useful test is what the business’s own customers are used to seeing, and the answer is usually available from anyone who has worked in that sector for a few years. It is a better basis for the decision than a general instinct about what disclosure looks like.
Deciding
When each one is the better answer.
Choose disclosed when
- The sector treats notices of assignment as routine
- Collections are not being done well and nobody owns them
- The larger advance rate materially changes what is available
- The owner is spending significant time chasing payment
- The customer base is broad enough that no single objection is fatal
Choose confidential when
- The customer base is small and the relationships are personal
- The finance function already collects on time
- A dominant customer has a policy against assignment
- The sector rarely sees these arrangements
- The business expects to exit the facility within a short period
Method
How this guide was written, and its limits.
The comparison is general and describes how disclosed and confidential arrangements ordinarily differ. Individual funders vary considerably in pricing, advance rates and eligibility rules, and the only figures that matter are the ones a funder puts in writing after assessing a specific ledger.
Whether a particular contract permits assignment is a legal question turning on its terms, and a solicitor is the right person to answer it. Nothing here is legal or financial advice, and this site is not a lender, a broker or a registered financial adviser.
Doing disclosure well
Three steps that change how it lands.
01
Order the customer list before anything goes out
The three or four accounts that matter most are worth handling personally, and the rest can receive the notice in the ordinary way. Sorting the ledger by value takes a minute and it determines where the effort goes, which is a better use of an afternoon than worrying about the whole list equally.
02
Call the top accounts first
A two-minute conversation explaining that funding has been arranged to support growth and that remittance details will change. It converts a surprise into a heads-up, and it lets the business frame the change rather than leaving a form letter to do it. Nobody who receives that call is more concerned afterwards than they were before it.
03
Check the notice wording
It is the paragraph every customer reads, and funders will ordinarily accommodate reasonable changes to tone within what the legal requirement allows. A notice that reads as administrative rather than as an announcement is a small thing that is worth asking for.
A practical middle
Selective disclosure, where it is available.
Some funders will fund selected customers on a disclosed basis while leaving the rest of the ledger alone, which suits a business with two or three large accounts where notices of assignment are routine and a long tail where they would be conspicuous.
It is not universally offered and it prices between the two, since the funder gets verification on part of the ledger and not the rest. Where it is available it can be a genuinely good answer for a business that has been treating this as a binary choice.
Asking is cheap. A funder that does not offer it will say so immediately, and the question itself demonstrates that the business has thought about which customers matter rather than approaching the whole ledger identically.
What is public anyway
Confidential to customers is not confidential to everyone.
A confidential facility is invisible to customers and it is not invisible generally. The security interest a funder takes is registered on the Personal Property Securities Register, which is public and searchable, so anyone running a search on the business will see that a funder holds an interest over its receivables.
In practice the people who run those searches are other lenders, prospective funders and occasionally a large customer conducting due diligence before awarding a contract. None of them is surprised to find a receivables facility, and it is worth knowing that the arrangement is discoverable rather than assuming otherwise.
That is an argument for accuracy rather than for disclosure. A business asked directly whether it uses a facility is better off answering plainly than treating it as something to be concealed, because the register has already answered the question.
The honest summary
How the decision usually resolves in practice.
A business that examines the question properly ordinarily reaches one of three positions. Where the sector treats disclosure as routine and the business has nobody doing collections well, factoring wins clearly and the discretion given up costs almost nothing. Where the customer base is small and personal and the finance function works, a confidential facility wins just as clearly.
The genuinely difficult cases sit in the middle: a business with a mixed ledger, some accounts where disclosure is unremarkable and others where it is not. That is where selective arrangements are worth asking about, and where the decision is worth making per customer rather than for the whole book.
What resolves it in every case is looking at the actual ledger rather than reasoning in the abstract. Sorting customers by value, and asking of the top few whether a notice of assignment would be unremarkable to them, turns a general anxiety into a specific and answerable question.
The trade, summarised
What each side of the decision buys.
Disclosure buys
- A lower fee, because the funder can verify and receive payment directly
- A higher advance rate on the same ledger, and frequently a larger facility
- More generous eligibility rules, since the funder has better visibility
- Collections handled by a party with no relationship to protect, under factoring
- Less reporting, because verification happens through the customer rather than through documents
Confidentiality buys
- Customer relationships that stay entirely direct and unremarked
- Freedom from a conversation with every account about a change of payee
- A cleaner exit, since nothing has to be reversed with customers
- The ability to fund selectively rather than committing the whole ledger
- No exposure to how a third party speaks to a valued customer
What can go wrong
Three situations disclosure creates and confidentiality does not.
None of these is a reason to avoid disclosure. All three are manageable, and all three are easier to manage before they happen.
A contract prohibits assignment
Some supply agreements restrict the assignment of receivables, and the clause is frequently buried and rarely read at the point a facility is being arranged.
What happens:That customer drops out of the fundable ledger, reducing the facility by whatever share of the book they represent.
The funder collects clumsily
A valued customer is chased in a way the business would not have chosen, and the business is not in the room when it happens.
What happens:A commercial cost that appears on no fee schedule, which is why how a funder collects is worth establishing before signing rather than afterwards.
Remittance details are missed
A customer continues paying into the old account after the notice, which happens more often than anyone expects, particularly where payment details are stored in a system rather than looked up.
What happens:Funds arriving in the wrong place and having to be forwarded, which is administrative rather than serious and is avoided by confirming the change with each large account directly.
The first of these is the only one that changes the size of the facility, and it is the one that can be checked in advance. Reading the assignment clause in the agreements with the largest three customers takes twenty minutes.
The funding cost
What a drawn balance costs to carry.
Both arrangements charge on what is drawn. The difference between them shows up in the rate, the advance and the service fee rather than in the arithmetic. Indicative only, and not a quote or offer of credit.
Indicative interest cost
Weekly
$242/week
$1,050 /month $12,600 a year while drawn
$180,000
$5,000 $500,000
$90,000
Nothing drawn Fully drawn
14.00% p.a.
8% (secured) 30% (unsecured)
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
Sending to Prospa
Your $180,000 scenario
$90,000 drawn at 14.00% . Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
Redirecting…
References
Sources
- Personal Property Securities Register
Backs the description of the security registration both arrangements ordinarily involve.
- Companies Office
The register used to confirm the entities involved in an assignment.
- New Zealand Law Society
Referenced for the point that whether a contract permits assignment is a question for a solicitor.
- Commerce Commission
The regulator whose guidance covers conduct between businesses.
- Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.
FAQ
Questions, answered
What is a notice of assignment?
A short statement on the invoice telling the customer that the debt has been assigned and that payment should be made to the funder. Alongside it the remittance details change, and that is the whole of what a customer sees.
Does disclosure make a facility cheaper?
Ordinarily yes. The funder can verify invoices with the customer and receives payment directly, which reduces its risk and shows up as a lower fee, a higher advance rate and frequently a larger facility on the same ledger.
How do customers usually react?
For most accounts payable teams it is a payee change that gets processed like any other. A relationship manager may ask what has changed, and an honest answer about arranging funding to support growth is ordinarily the end of it.
Can a customer refuse?
Some contracts restrict assignment of receivables and some large buyers object as a matter of policy. Where a significant customer does, the fundable ledger shrinks, which is worth establishing before the arrangement is signed.
Is confidentiality worth paying for?
It depends on the sector and on the customer base. Where relationships are personal and the customer base is small, frequently yes. Where disclosure is routine in the sector, the premium is buying discretion nobody was going to notice.
What does confidentiality require in return?
Heavier verification, periodic audits, stricter eligibility rules and more reporting, because the funder cannot confirm invoices with the customer. Those requirements are an operational cost on top of the price difference.
Can a business switch later?
Yes, and switching from disclosed to confidential is more visible than the reverse, because customers have already been notified. The exit terms of the existing arrangement are worth reading before agreeing a new one.
Which sectors treat disclosure as normal?
Construction, transport, labour hire and recruitment, where the mismatch between weekly costs and monthly billing makes receivables funding close to standard practice. In those sectors a notice of assignment carries very little signal.
Should customers be told before the notice arrives?
Where disclosure is chosen, a short call to the largest accounts beforehand changes how it lands entirely. It converts a surprise into an administrative heads-up and saves considerably more time than it takes.
Does disclosure improve collections?
Under factoring, where the funder also collects, frequently. A party with no relationship to protect follows a process regardless, and the improvement in days is part of what the arrangement buys.
Is a confidential facility completely invisible?
To customers, ordinarily yes. It is not invisible on the Personal Property Securities Register, where the security interest is public, so anyone searching the business will see that a funder has an interest.
Is this guide financial advice?
No. It compares two arrangements in general terms. This site is not a lender, a broker or a registered financial adviser, and which suits a particular business depends on facts a website cannot see.
Related
Keep reading
Invoice factoring
The disclosed arrangement in full.
Read onInvoice finance
The confidential alternative.
Read onInvoice finance against factoring
The three receivables options, separated.
Read onWhat invoice finance actually costs
What the price difference between them really is.
Read onAll eight products
Every facility compared in the same shape.
Read on