Invoice Factoring in New York: Rules, Liens, Payers

New York rules at a glance, verified November 12, 2026. Disclosure law in effect. General information, not legal advice.
Disclosure law	In effect (since August 1, 2023); transactions of $2.5MM or less
Covers factoring?	Yes, AR purchases included
APR in disclosure?	Yes
UCC filing office	New York Department of State, Division of Corporations, State Records and Uniform Commercial Code (UCC Section, Albany)
State agencies pay	Generally 30 days after a state agency receives a proper invoice, excluding legal holidays; 15 days for qualifying small businesses that invoice electronically and request expedited payment
Late-pay interest (state)	Interest at the overpayment rate set by the Commissioner of Taxation and Finance (State Fin. Law §179-g); amounts under $10 are not paid
Lien deadline (private)	Within 8 months after completion of the contract or the claimant's last furnishing; 4 months for a single-family dwelling
Public payment bond	Payment bond generally required on state public improvement contracts; the agency may waive bonds on contracts under $100,000

Who uses invoice factoring in New York?

New York businesses that factor usually sell to large institutions with long approval chains. In New York City that means banks, media companies, retailers and hospital systems such as Northwell Health and NYC Health + Hospitals, plus public payers like the MTA, the Port Authority of New York and New Jersey and city agencies. Upstate, suppliers bill semiconductor and advanced manufacturing plants in the Capital Region and around Syracuse, university medical centers, and defense customers at Fort Drum and West Point. Staffing firms, construction subcontractors, distributors and apparel and food suppliers make up much of the demand, because their customers are bigger and slower than they are.

Terms of net 45 to net 90 are common with large New York buyers, and public owners add their own approval steps. On construction jobs, subcontractors wait on pay applications that can take 6 weeks or more to clear, so many factor approved pay apps. Seasonality is real in the Hudson Valley and upstate: construction slows in winter, while food, beverage and holiday retail suppliers peak in the fall.

Industries that factor most: Financial and professional services suppliers, Healthcare staffing and services, Construction subcontracting, Apparel and consumer goods, Food and beverage distribution, Advanced manufacturing.
Metro areas: New York City, Long Island, Buffalo, Rochester, Albany, Syracuse.
Federal installations that buy from local firms: Fort Drum, U.S. Military Academy at West Point, Watervliet Arsenal.

What does New York's commercial financing disclosure law require?

New York Commercial Finance Disclosure Law, passed as S5470-B (2020, Chapter 369), amended by S898 (2021) (N.Y. Fin. Serv. Law §801 et seq. (Article 8); 23 NYCRR Part 600), has been in effect since August 1, 2023. It requires covered providers to give a written cost disclosure before a business signs. Scope: transactions of $2.5MM or less.

It reaches accounts receivable purchase transactions, which includes invoice factoring.

The disclosure must include an estimated APR, which makes offers easier to compare with a bank line.

Exemptions: Financial institutions, deals over $2.5MM, deals secured by real property, true leases, certain vehicle dealer financing of $50K or more, and providers making 5 or fewer New York deals in 12 months are exempt.

Enforcement: The Superintendent of Financial Services enforces it, with civil penalties of up to $2,000 per violation or $10,000 per willful violation; the statute gives no private right of action.

Section 806 sets the factoring-specific disclosure. Because factoring has no fixed term, the APR shown is an estimate, so compare the dollar finance charge too.

Compare offers side by side in the proposal decoder, and see every state's law in our disclosure law tracker.

How do UCC filings work in New York?

Where UCC-1s are filed in New York: New York Department of State, Division of Corporations, State Records and Uniform Commercial Code (UCC Section, Albany). Online searches are free to run, but a certified search by Information Request (Form UCC-11) costs $25; fixture filings are recorded with the county where the real property sits.

A factor will search that index on your exact legal name before it funds, and will file its own UCC-1 on your accounts receivable at closing. Anyone already claiming your receivables, such as a bank, an SBA lender or a merchant cash advance provider, must release, subordinate or sign an intercreditor agreement first. Search your own name first at the official New York UCC search; old filings from paid-off lenders are common and can take a week or more to terminate. More in UCC liens and intercreditor agreements.

How fast do government payers in New York pay?

New York state agency deadline (N.Y. State Fin. Law §179-f (state agencies); Gen. Mun. Law §106-b (municipalities); Pub. Auth. Law §2880 (public authorities)): Generally 30 days after a state agency receives a proper invoice, excluding legal holidays; 15 days for qualifying small businesses that invoice electronically and request expedited payment. Late interest: Interest at the overpayment rate set by the Commissioner of Taxation and Finance (State Fin. Law §179-g); amounts under $10 are not paid. State highway construction contracts allow 75 days, municipal payments may run 45 days when an elected body must approve, and New York City measures payment from its own invoice acceptance date. Primes on public jobs generally must pay subs within 7 days of receipt.

Federal agencies follow the Prompt Payment Act: generally 30 days after a proper invoice, with interest at the Treasury rate (4.75% for July 1, 2026 to December 31, 2026) when they pay late. To factor federal invoices, the funder usually needs an assignment of claims acknowledged by the contracting officer, which adds a week or two to setup. See factoring for government contractors and the prompt payment interest calculator.

What do New York lien and prompt pay rules mean for construction factoring?

Funders that factor construction receivables check lien and bond rights before they advance on a pay application, because those rights are what get an unpaid sub paid. Described generally:

Mechanics lien deadline (private work, N.Y. Lien Law §3 et seq. (filing deadline in §10)): Within 8 months after completion of the contract or the claimant's last furnishing; 4 months for a single-family dwelling. To enforce: Generally 1 year after the lien is filed, unless extended (a second extension requires a court order).
Preliminary notice: Not generally required.
Private prompt pay (N.Y. Gen. Bus. Law §756 et seq.): owner to contractor: owner approves or disapproves an invoice within 12 business days, then pays within 30 days after approval; contractor to sub: 7 days after the contractor receives good funds; late interest: 1% per month, or a higher contract rate.
Public projects (N.Y. State Fin. Law §137): you cannot lien public property, so payment bonds take its place. Bond required: Payment bond generally required on state public improvement contracts; the agency may waive bonds on contracts under $100,000. Claim notice: A claimant with no direct contract with the prime must give written notice to the prime within 120 days after its last labor or materials.
Read every lien waiver before you sign it, and ask counsel how a waiver signed before payment affects your rights. More in factoring for construction subcontractors.

What else should a New York business know?

On public jobs, a subcontractor can also file a notice of lien on public improvement funds (Lien Law §12) up to 30 days after completion and acceptance, which a factor buying public receivables will look for.

Questions people ask

Is invoice factoring legal in New York?

Yes. Factoring is a sale of receivables, and New York treats it as a commercial transaction under the UCC rather than a loan. New York does regulate how factoring offers are presented: for deals of $2.5MM or less, most non-bank providers must give a standardized disclosure under the Commercial Finance Disclosure Law before you sign.

Does New York require a disclosure for factoring deals?

Yes, for most deals of $2.5MM or less. Since August 1, 2023, providers covered by Financial Services Law Article 8 must disclose the purchase price, finance charge, an estimated APR and other terms on factoring offers. Banks, providers with 5 or fewer New York deals a year, and larger deals are exempt. The Department of Financial Services enforces it.

Where do I search for UCC liens in New York?

Search the New York Department of State's UCC records online at ucc-efiling.dos.ny.gov using your exact legal name. Funders look for banks, equipment lenders or cash advance providers claiming accounts receivable. A certified search costs $25. Fixture filings tied to real estate are recorded at the county level instead.

How fast do New York public owners pay contractors?

State agencies generally must pay within 30 days of a proper invoice, or 15 days for qualifying small businesses that ask for expedited payment, with interest owed after that. Highway contracts allow 75 days and New York City runs on its own invoice acceptance clock. Primes generally must pay subs within 7 days of being paid.

How fast can a New York business get funded by factoring?

With a clean file (current AR aging, invoices, a clear UCC search and creditworthy customers), first funding commonly takes about one to three weeks, and later invoices usually fund within a day or two of verification. Federal receivables take longer because of the assignment of claims.

Sources

General information, not legal advice. Statutes and deadlines change and have exceptions; check the source or ask counsel before relying on one. Spot an error? Tell us and we will fix it.

Invoice factoring in New York