Compliance and Legal Considerations
Deed of Assignment
Daphne
Have you ever seen a notice on an invoice stating that payment should be made to a different party? If so, you’ve encountered a Deed of Assignment (in Dutch: Akte van Cessie). While it may sound like complex legal jargon, it is one of the most vital tools in the modern business world for ensuring company liquidity.
What exactly is a Deed of Assignment?
A deed of assignment is a written agreement through which a creditor (the assignor or cedent) transfers a claim against a debtor (the debtor or debitor cessus) to a third party (the assignee or cessionaris).
Once this deed is executed, the original creditor steps out of the legal construction. The new party acquires all legal rights, including the authority to collect the debt.
Key Terminology:
Assignor (Cedent): The original creditor who transfers the claim.
Assignee (Cessionaris): The new creditor (e.g., Finqle) who takes over the claim.
Debtor (Debitor Cessus): The customer who owes the payment.
Common Use Cases
Assignment is more common than you might think:
Factoring: A company sells its outstanding invoices to a factoring company like Finqle to generate immediate cash flow.
Insurance: After a claim, the compensation is paid directly to the repair shop via an assignment.
Funeral Insurance: The insurer pays the funeral director directly based on the deed.
Debt Collection: A claim is transferred to a collection agency for recovery.
The Link to Factoring: Why Businesses Choose Assignment
In the world of factoring, the deed of assignment is the engine behind the service. Entrepreneurs don’t want to wait 30, 60, or 90 days for their money. By transferring the claim to Finqle via assignment, the business owner receives the invoice amount in their bank account almost immediately.
Is it strange to have an assignment notice on an invoice? Sometimes, business owners worry about how their customers will react to an assignment text. They wonder, "Will my client think I'm in financial trouble?"
The reality is that assignment is widely accepted today. Large corporations and professional organizations do not see an assignment notice as a red flag. Instead, they view it as a strategic choice. They understand that successful companies use factoring to finance growth and manage working capital efficiently. It is a hallmark of professional financial management.
Important for the Debtor
For the customer (the debtor), very little changes. Their legal position remains protected, and they retain all rights to defense or set-off. However, they must pay the correct party. Once the assignment has been formally notified, paying the original creditor is no longer "discharging." This means the new owner of the claim could legally demand payment again.
Conclusion
The deed of assignment is simply the legal bridge to faster cash flow. At Finqle, we make this process transparent and seamless, allowing you to focus on what truly matters: growing your business.
Finqle vs traditional banks
Unlike traditional banks with legacy systems and standardized products, Finqle provides customizable services and automated workflows.
Finqle vs traditional factoring companies
Finqle offers a modern, tech-driven approach to factoring, setting it apart from traditional factoring companies.
Factoring vs a loan
Factoring is not a loan. Therefore, it offers an advantage on your balance sheet: you do not incur short-term or long-term debt through factoring. In contrast, with a loan, this is the case.
