Notice Of Assignment Of Accounts Receivable Template for England and Wales

When you assign accounts receivable to another party, you must provide formal notice to your debtors to ensure the assignment is legally effective under England and Wales law. A Notice of Assignment of Accounts Receivable is the document that accomplishes this critical legal requirement, transferring your right to collect payment while protecting both you and the assignee from potential disputes.

When do you need this document?

You need this notice whenever you transfer your right to receive payment to another party. Common situations include factoring arrangements where you sell your receivables to improve cash flow, asset-based lending where receivables serve as security, and business acquisitions where debts form part of the transferred assets. The notice is also essential during corporate restructuring when receivables move between group companies, or when you assign specific debts as part of a settlement agreement. Without proper notice, debtors may continue paying you directly, creating complications for the assignee's collection rights.

Key legal considerations

The assignment must be absolute rather than conditional to qualify as a legal assignment under the Law of Property Act 1925. Your notice must clearly identify the assigned receivables, including contract details, amounts owed, and debtor information. Include precise payment instructions for the assignee, specifying new bank details and contact information. Consider whether the original contract contains anti-assignment clauses that might restrict your ability to transfer the receivables. If your company is creating a charge over the receivables, ensure compliance with Companies Act 2006 registration requirements. For regulated financial services activities, verify compliance with the Financial Services and Markets Act 2000. Address any implications under the Late Payment of Commercial Debts (Interest) Act 1998 for ongoing interest calculations.

Legal requirements in England and Wales

Under Section 136 of the Law of Property Act 1925, legal assignments must be in writing and signed by the assignor. Written notice must be given to the debtor for the assignment to take priority over subsequent assignments and to cut off the debtor's right to pay the original creditor. The notice should be served promptly after the assignment to establish the assignee's rights effectively. Include your original contract reference numbers and dates to help debtors identify the assigned receivables accurately. Ensure the assignee's details are complete and correct, as debtors will rely on this information for future payments. Keep proof of service of the notice, as this may be required to demonstrate compliance with statutory requirements in any future disputes.