Supplier invoice sold to a factor: who do I pay?
Verify the notice with your supplier through an established contact and contact the factor independently. Confirm the invoice, outstanding balance, authorised account and how payment will settle that invoice. Block duplicate payment while checks are pending. Share the documents with Cambridge China Bridge.
Establish what the notice covers
HMRC describes factoring as taking over responsibility for collecting another business's debts. If your supplier says an invoice has been sold, ask for the written assignment notice identifying the supplier, factor, your business, affected invoice and effective date. Ask whether it covers named invoices or future invoices too.
Treat this as a separate payment approval task. Our supplier payment guide covers ordinary payment controls; this guide adds the checks needed when the proposed recipient differs from the seller. Do not approve or reject the change solely because the account name differs.
Verify the notice through independent contacts
Call your established supplier contact using details already held in your purchasing records. Ask them to confirm the notice, its scope and the factor's identity. Contact the factor through independently obtained contact details, rather than a telephone number or link in the notice. Confirm its account name, bank details and invoice reference.
Ask each party to confirm the same payment instruction in writing. Keep the notice, replies and callback notes with the invoice. A forwarded email, matching logo or familiar signature is insufficient approval evidence. If details conflict, flag the invoice for urgent review and seek clarification before changing the payment record.
Confirm the payee and payment effect
Before release, obtain confirmation of who is authorised to receive payment, the exact account and whether payment there will settle the identified invoice. Ask the supplier to confirm it will stop collecting that balance directly and the factor to confirm how it will acknowledge receipt. Distinguish the factor's company name from any collection-account name.
Do not assume that supplier confirmation alone settles a disputed assignment. Where entitlement is unclear, claims compete or the contract restricts assignment, ask a solicitor to review the notice and applicable law before payment. A UK buyer's location alone is insufficient for choosing the legal analysis. See assignment or novation for a wider contract-transfer review.
Reconcile the balance and block duplicate payment
Match the notice to the original invoice and purchase order. Reconcile deposits, previous transfers, credit notes, returns and disputed amounts with the supplier and factor. Check pending bank instructions and scheduled payment runs as well as posted payments. If money has already left, send the remittance evidence and request reconciliation before considering another transfer.
Keep the original invoice as the payable record; attach the factor's notice rather than creating another bill. Record the approved recipient against the affected invoice, remove its old payment instruction and require a separate reviewer to approve the change. After payment, attach the bank reference, obtain the factor's allocation confirmation and reconcile the supplier statement. Investigate any later demand against that record.
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Handle disputes and later changes
Send unresolved quality issues, credits or balance differences to both parties and ask for a reconciled statement. Do not silently deduct a disputed amount or treat factoring as approval to release payment before the agreed inspection trigger. Ask for a written response before the due date; seek advice on payment timing where the disagreement remains. See withholding payment for that separate decision.
Verify any cancellation of the notice or instruction to resume paying the supplier through independent contacts again. If a transfer went to an unverified account, contact your bank immediately and provide the notice and payment evidence; use our supplier payment fraud guide. Cambridge China Bridge's staff in China can help obtain supplier-side records for your review.
Frequently asked questions
Should I pay the supplier or the factor?
Pay the recipient whose authority and account you have independently verified for that invoice. Obtain confirmation of how payment settles the balance. Seek legal advice if entitlement remains disputed.
How do I check a factoring notice is genuine?
Call your established supplier contact and contact the factor using independently obtained details. Compare their written confirmations of the invoice, scope, balance and receiving account.
What if I already paid the supplier?
Send the payment date, bank reference and remittance evidence to both parties. Check whether the transfer completed and ask them to reconcile it before considering another payment.
How do I avoid paying a factored invoice twice?
Keep the original invoice as the payable record, attach the notice and replace its approved payment instruction. Check scheduled transfers, record the bank reference and obtain confirmation of allocation.