Notice period

The required advance notice before terminating or changing a contract.

Why it matters

The notice period determines how much lead time is required before a termination, dispute escalation, or operational change takes effect. Shorter notice periods benefit sellers who need to exit quickly; longer periods benefit factors by ensuring continued volume during transition. Notice requirements apply not just to termination but also to changes in banking relationships, new customers added to the program, disputes the seller wants to escalate, and changes in ownership or control. Missing required notice may not void the underlying action but can trigger penalties or delay the effective date of the change.

How it appears in contracts

Notice period requirements appear throughout factoring agreements, not just in the termination section. Look for notice provisions related to customer disputes, new account debtors being added to the program, changes in ownership or control of the seller business, and tax lien filings. The agreement should specify the required delivery method for each type of notice: some require certified mail; others accept email with confirmation. The notice period clock typically starts when the factor receives the notice, not when the seller sends it, so delivery method selection affects the effective start of any required waiting period.

Related terms

Related article: How invoice factoring works

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.