If you have read our guide on the Notice of Assignment (NOA) in trucking, you already know how factoring works and why the NOA is the foundation of your relationship with a factoring company. But what happens when that relationship ends?
That is where the Letter of Release comes in.
Understanding this document is just as critical as understanding the NOA — because without it, switching factoring companies or returning to self-billing can become a legal and financial headache.
1. What Is a Letter of Release in Trucking?
A Letter of Release (sometimes called a Release of Assignment or NOA Release Letter) is a formal legal document issued by your factoring company that cancels the existing Notice of Assignment.
In plain English? It is the letter that tells your brokers and shippers:
"The previous payment instructions have been cancelled. You may now send payments to a new factoring company — or directly back to the carrier."
Just as the NOA directed brokers to send payments to your factor, the Letter of Release in trucking officially undoes that instruction. Without it, brokers are legally obligated to keep paying your old factoring company — even if you have already moved on.
This is not a minor administrative detail. It is a legally binding reversal of the assignment that was put in place when you signed your factoring agreement.
2. Letter of Release vs. Notice of Assignment: Key Differences
Many carriers confuse these two documents or assume one automatically replaces the other. They do not.
Think of the NOA as the "start" button and the Release of Assignment as the "stop" button. Both must be properly executed for your cash flow and legal standing to remain clean.
3. When Do You Need a Release of Assignment?
There are several common situations where a Letter of Release from a factoring company becomes essential:
Switching Factoring Companies: This is the most common reason carriers need a release letter. If you are moving to a new factor with better rates, fewer fees, or more flexible terms, your new factoring company cannot legally collect on your invoices until the old NOA is formally cancelled with a release of assignment.
Leaving Factoring Altogether: If your trucking business has grown to the point where you no longer need invoice factoring, a factoring release letter returns full billing control back to you. Your brokers will need written confirmation that they should resume paying you directly.
Contract Disputes or Early Termination: Some factoring agreements include long-term contracts. If you are exiting early due to poor service, fee disputes, or contract violations, obtaining a release of NOA is a critical step in protecting your receivables during the transition.
Broker or Shipper Requests: Occasionally, a broker will flag a conflict between an old NOA on file and a new one from a different factor. In this case, they will request a formal NOA release letter before processing any payments — protecting themselves from double-payment liability.
4. How to Request a Letter of Release from Your Factoring Company
The process of obtaining a factoring release letter varies by company, but the general steps are consistent across the industry:
Step 1 — Review Your Contract: Before requesting a release, review your factoring agreement carefully. Look for clauses covering termination notice periods (commonly 30–90 days), early termination fees, outstanding invoice obligations, and UCC lien release requirements.
Step 2 — Submit a Formal Written Request: Send a written termination notice to your factoring company. This should be done via email with read receipts or certified mail to create a paper trail. Verbal requests are not sufficient.
Step 3 — Settle Any Outstanding Balances: Your factor will not issue a release of assignment letter until all outstanding advances, fees, and chargebacks are resolved. This includes any invoices that have been funded but not yet collected.
Step 4 — Request UCC Lien Termination: When you signed with your factoring company, they likely filed a UCC-1 financing statement against your receivables. As part of the release process, request a UCC lien release or UCC-3 termination filing to fully clear your accounts receivable from their legal claim.
Step 5 — Distribute the Release Letter to Brokers: Once you receive your Letter of Release, send it to every broker and shipper who had the original NOA on file. Your new factoring company — or your own accounting team — will then issue updated payment instructions.
5. Letter of Release: Samples and Templates
Below is a Letter of Release sample that reflects the standard format used across the trucking and freight factoring industry.
Letter of Release Template
You can use this letter of release template as a reference. Your factoring company will issue their own branded version, but this gives you a clear picture of what to expect.
[OUTGOING FACTORING COMPANY LETTERHEAD]
TO: Accounts Payable Manager RE: Release of Notice of Assignment — [Your Trucking Company Name]
Dear Broker/Shipper,
This letter serves as formal notification that the Notice of Assignment previously issued on behalf of [Your Trucking Company Name] has been cancelled and is no longer in effect.
Effective [Date], [Outgoing Factoring Company Name] hereby releases all claims to the accounts receivable of [Your Trucking Company Name].
Please update your records accordingly. Future invoices submitted by [Your Trucking Company Name] should be paid as directed by any new payment instructions you receive directly from the carrier or their authorized financial partner.
This Release of Assignment supersedes all prior NOA communications from [Outgoing Factoring Company Name].
Sincerely, [Authorized Signatory — Outgoing Factoring Company] [Title] [Contact Information]
Keep a signed copy of this release letter template for your records, and confirm receipt with each broker to avoid any payment misdirection during the transition period.
6. FAQs: Letter of Release
What is a Letter of Release in trucking? A Letter of Release is a legal document issued by a factoring company that formally cancels a Notice of Assignment, returning payment control to the carrier or transferring it to a new factor.
How long does it take to get a Letter of Release? This depends on your factoring agreement and how quickly outstanding balances are settled. Typically, the process takes anywhere from a few days to 30 days after all obligations are cleared.
Can a broker refuse to honor a Letter of Release? A broker cannot ignore a valid, properly issued release of NOA. Once they receive it, they are legally obligated to update their payment records accordingly.
Do I need a new NOA when switching factoring companies? Yes. The process goes in order: first, obtain the Letter of Release from your old factor. Then, your new factoring company will issue a fresh NOA to all your brokers. Never let the two overlap without written documentation.
What happens if I don't get a Letter of Release? Without a formal factoring release letter, brokers will continue sending payments to your old factoring company — even after you have switched. This can result in serious cash flow disruptions, disputes, and potential legal complications.
Is a Letter of Release the same as a UCC lien release? They are related but not the same. A Letter of Release cancels the NOA with your brokers. A UCC lien release (UCC-3 termination) removes the factoring company's legal claim over your receivables at the state filing level. You should request both when leaving a factoring company.
Looking to better understand how factoring documents protect your trucking business? Read our full guide on the Notice of Assignment (NOA) in Trucking for the complete picture.