Technically speaking @loaders is correct. In Canada a properly executed Notice of Assignment (NOA) will define who needs to be paid and will define all legal action. This properly executed NOA needs to be filed with the PPSA (Personal Property Securities Act) and the person providing the NOA should be able to provide it. A letter stating that they are now the Factoring Company (FC) and all payments should go to them doesn't mean that it is properly executed NOA. The PPSA will be very specific about the legal entities involved, the timeline and what type of invoices are involved. You should also obtain an up-to-date PPSA report on the carrier because there may be other entities who have a higher security rank than that of the FC and technically your AP should go to the highest-ranking entity in the PPSA or you risk a legal challenge there again. Lets say the previous factor didn't dissolve their PPSA record - who are you really going to pay? The other risk that can follow you is that most FC report payment history to DnB and Equifax. If one payment needs to be held due to a potential claim you will see that on your credit history. Be very careful. There are valid factoring companies doing the business they have always done but in today's trucking mess, with little to no enforcement and little knowledge about the correct processes, a snake in the grass can masquerade as a FC and really make a problem.
There are ways to cut the head off the snake.
1. Tell the carrier you don't pay FC. Tell them not to try to factor.
2. Put it in your carrier confirmation that you do not pay FC but give them an out - do quick pay or tell them to call for other arrangements. FC look at the confirmation and if they see that they will deny the carrier the option. If they see anything they don't like they will not factor the invoice (eg-terms 75days).
3. Should you receive a NOA from a FC call the trucking company and tell them that you will give them no further loads. Write the FC and tell them that you want the proof of PPSA registration. Confirm that the PPSA info matches the legal names of the carrier you gave the load to and matches the FC name on the PPSA. If there are any discrepancies, you have to investigate them. (eg. you only know the carrier by their trade name but the PPSA shows legal name - you then need a valid corporate profile report). Then tell the FC you have to have your legal team review all the documentation which may delay payment.
4. If applicable, advise the FC that you need to investigate if the load was double brokered and the proper payment entity needs to be identified.
5. The process of going through all this work costs money too. Tell the carrier you want them to pay a fee to manage their FC. Getting an up-to-date corporate profile, PPSA reports and such are not free and usually require a corporate lawyer.
Whatever you do, don't just roll over and pay someone else - do your homework.
There are ways to cut the head off the snake.
1. Tell the carrier you don't pay FC. Tell them not to try to factor.
2. Put it in your carrier confirmation that you do not pay FC but give them an out - do quick pay or tell them to call for other arrangements. FC look at the confirmation and if they see that they will deny the carrier the option. If they see anything they don't like they will not factor the invoice (eg-terms 75days).
3. Should you receive a NOA from a FC call the trucking company and tell them that you will give them no further loads. Write the FC and tell them that you want the proof of PPSA registration. Confirm that the PPSA info matches the legal names of the carrier you gave the load to and matches the FC name on the PPSA. If there are any discrepancies, you have to investigate them. (eg. you only know the carrier by their trade name but the PPSA shows legal name - you then need a valid corporate profile report). Then tell the FC you have to have your legal team review all the documentation which may delay payment.
4. If applicable, advise the FC that you need to investigate if the load was double brokered and the proper payment entity needs to be identified.
5. The process of going through all this work costs money too. Tell the carrier you want them to pay a fee to manage their FC. Getting an up-to-date corporate profile, PPSA reports and such are not free and usually require a corporate lawyer.
Whatever you do, don't just roll over and pay someone else - do your homework.
