| Disclosure law | None |
|---|---|
| UCC filing office | Ohio Secretary of State, Business Services Division, UCC Section (Columbus) |
| State agencies pay | By the contract payment date, or if none, 30 days after the state agency receives a proper invoice; the agency must flag a defective invoice within 15 days |
| Late-pay interest (state) | Monthly rate equal to 1/12 of the annual rate set under R.C. 5703.47 (the state's tax interest rate), compounding every 30 days; amounts under $10 are not paid |
| Lien deadline (private) | Within 75 days after last furnishing on commercial projects; 60 days for one- and two-family dwellings and residential condo units; 120 days for oil and gas well liens (R.C. 1311.06) |
| Public payment bond | Ohio Rev. Code §153.54 to 153.56 |
Who uses invoice factoring in Ohio?
Ohio businesses that factor often sit in long supply chains. Tier 2 and tier 3 suppliers ship parts to Honda in Marysville and East Liberty, Stellantis in Toledo and Ford and GM operations, and those OEMs and tier 1s set the payment terms. Cleveland Clinic, OhioHealth and other hospital systems buy staffing and services. Columbus and Cincinnati host big distribution and air cargo operations, and consumer goods and grocery headquarters in Cincinnati drive vendor receivables. Around Dayton, contractors serve Wright-Patterson Air Force Base, and the Intel site in New Albany has pulled in construction subcontractors.
Automotive buyers commonly pay on net 45 to net 90 terms, and model changeovers or production cuts can stall payments. Construction subcontractors wait on pay applications and retainage, protected by Ohio's 10-day pass-through rule. Freight and logistics firms face 30 to 60 day shipper terms, and construction in northern Ohio slows in winter.
- Industries that factor most: Automotive parts manufacturing, Logistics and warehousing, Healthcare staffing and services, Construction subcontracting, Steel and metal fabrication, Defense and aerospace contracting.
- Metro areas: Columbus, Cleveland, Cincinnati, Toledo, Akron, Dayton.
- Federal installations that buy from local firms: Wright-Patterson Air Force Base, Defense Supply Center Columbus (DLA Land and Maritime), NASA Glenn Research Center.
Does Ohio regulate invoice factoring?
Ohio has no commercial financing disclosure law, so a factor is not required by state law to give you a standardized cost disclosure. There is no federal one for business financing either. That puts the burden on you to get every fee in writing.
Factoring is generally structured as a purchase of your invoices rather than a loan, which is why consumer lending rules and usury caps generally do not apply to it. The protections that do apply come from your contract and from the Uniform Commercial Code, which governs the sale of accounts in every state.
Ask any provider for the total dollar cost on a sample invoice, the advance rate, every fee, the term and the exit terms. Our proposal checklist lists what a good proposal shows, and the disclosure law tracker shows which states require it.
How do UCC filings work in Ohio?
Where UCC-1s are filed in Ohio: Ohio Secretary of State, Business Services Division, UCC Section (Columbus). Online searches by debtor, secured party or filing number are free, and official search certificates can be ordered; fixture filings and timber or as-extracted collateral go to the county recorder (R.C. 1309.501).
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 Ohio 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 Ohio pay?
Ohio state agency deadline (Ohio Rev. Code §126.30): By the contract payment date, or if none, 30 days after the state agency receives a proper invoice; the agency must flag a defective invoice within 15 days. Late interest: Monthly rate equal to 1/12 of the annual rate set under R.C. 5703.47 (the state's tax interest rate), compounding every 30 days; amounts under $10 are not paid. Applies to state agencies. On public construction, primes and subs must pass payment down within 10 days, with 18% annual interest on late payments to subs.
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 Ohio 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, Ohio Rev. Code §1311.01 et seq.): Within 75 days after last furnishing on commercial projects; 60 days for one- and two-family dwellings and residential condo units; 120 days for oil and gas well liens (R.C. 1311.06). To enforce: The lien lasts 6 years after the affidavit is filed (R.C. 1311.13), but if the owner serves a Notice to Commence Suit, suit is generally due within 60 days of receiving it.
- Preliminary notice: Subs and suppliers without a contract with the owner must serve a Notice of Furnishing within 21 days after first furnishing (or after a Notice of Commencement is recorded) when the owner has recorded a Notice of Commencement.
- Private prompt pay (Ohio Rev. Code §4113.61): owner to contractor: no statutory deadline; set by the contract; contractor to sub: within 10 calendar days after the contractor receives payment from the owner, including final retainage; late interest: 18% per year on late payments to subs and suppliers.
- Public projects (Ohio Rev. Code §153.54 to 153.56): you cannot lien public property, so payment bonds take its place. Claim notice: Subs or suppliers furnishing more than $30,000 without a direct contract with the prime must serve a Notice of Furnishing; claim to the surety no later than 90 days after completion and acceptance; suit after 60 days and within 1 year of acceptance.
- 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 Ohio business know?
- On Ohio public jobs, subs can also file a lien on unpaid public contract funds, served on the public authority and recorded with the county recorder, alongside the bond claim.
- Ohio's 18% annual interest on late payments to subs (R.C. 4113.61) is one of the higher statutory rates, which gives subcontractors real recourse when a prime holds funds.
Questions people ask
Is invoice factoring legal in Ohio?
Yes. Factoring is a sale of receivables under Ohio's version of UCC Article 9 (R.C. Chapter 1309). Ohio has no factoring license and no commercial financing disclosure law. The funder files a UCC-1 with the Ohio Secretary of State and notifies your customers to pay it directly.
Does Ohio require a disclosure for factoring deals?
No. Ohio has not passed a commercial financing disclosure law like New York's or Georgia's. Its 2026 litigation funding law (HB 105) does not apply to invoice factoring. Without a required summary, ask each funder for the advance rate, every fee, the dollar cost on your expected volume and the termination terms in writing.
Where do I search for UCC liens in Ohio?
Use the Ohio Secretary of State's UCC portal at ucc.ohiosos.gov. Searches by debtor name, secured party or filing number are free and show filing images. Order an official search certificate if a funder or lender needs one. Clear old liens with UCC-3 terminations before you apply.
How fast must Ohio contractors pay subcontractors?
On both private and public construction, a contractor must pay a sub or supplier within 10 calendar days after receiving payment for that work, including retainage. Late payments accrue interest at 18% per year. Ohio sets no general deadline for private owners to pay the prime, so that depends on the contract.
How fast can a Ohio 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
- Venable, State commercial financing disclosure laws (March 2026)
- Ohio Revised Code §1357.09 (HB 105 litigation financing)
- Ohio Secretary of State, UCC Online Services
- Ohio Revised Code §1309.501 (filing office)
- Ohio Revised Code §126.30 (state agency late payments)
- Ohio Revised Code §4113.61 (payments to subcontractors)
- Ohio Revised Code §1311.06 (lien affidavit deadlines)
- Ohio Revised Code §1311.13 (lien duration)
- Levelset, Ohio mechanics lien
- Ohio Revised Code §153.56 (public bond claims)
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.