| Disclosure law | None |
|---|---|
| UCC filing office | Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations (UCC section, Harrisburg) |
| State agencies pay | 30 days after receipt of a proper invoice when the contract sets no due date, with a 15-day grace period before interest |
| Late-pay interest (state) | Interest penalties at the rate the Secretary of Revenue sets for overdue taxes; required for qualified small businesses (100 or fewer employees) that mark their invoices as such |
| Lien deadline (private) | Generally within 6 months after completion of the claimant's work |
| Public payment bond | Public works contracts over $5,000 |
Who uses invoice factoring in Pennsylvania?
Pennsylvania's B2B receivables come from big, slow institutions. Health systems such as UPMC, Penn Medicine and Jefferson buy staffing, supplies and services on long terms. Pharmaceutical and life sciences companies cluster around Philadelphia, and the Lehigh Valley and I-81 corridor hold some of the densest warehouse and distribution networks in the East. Pittsburgh adds steel, advanced manufacturing and energy work tied to Marcellus Shale gas. The federal government is a major payer too, through Tobyhanna and Letterkenny Army Depots, Naval Support Activity Mechanicsburg and Defense Logistics Agency buying in Philadelphia.
Typical commercial terms run net 30 to net 60, but hospital systems and large distributors often stretch past 60 days. Construction is a large factoring segment because Pennsylvania's Contractor and Subcontractor Payment Act sets 20-day and 14-day payment clocks with 1% per month interest. Natural gas work swings with drilling activity, and warehouse and trucking volume peaks in the fourth quarter.
- Industries that factor most: Healthcare services, Pharmaceuticals and life sciences, Warehousing and distribution, Steel and advanced manufacturing, Natural gas services, Construction.
- Metro areas: Philadelphia, Pittsburgh, Allentown, Harrisburg, Scranton.
- Federal installations that buy from local firms: Tobyhanna Army Depot, Letterkenny Army Depot, Naval Support Activity Mechanicsburg, Naval Support Activity Philadelphia, Carlisle Barracks.
Does Pennsylvania regulate invoice factoring?
Pennsylvania 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 Pennsylvania?
Where UCC-1s are filed in Pennsylvania: Pennsylvania Department of State, Bureau of Corporations and Charitable Organizations (UCC section, Harrisburg). Online UCC filing runs through the Department of State's Business Filing System (file.dos.pa.gov); an official search request costs $12 per debtor name, and fixture filings go to the county recorder of deeds.
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 before you apply; 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 Pennsylvania pay?
Pennsylvania state agency deadline (72 P.S. §1507 (Fiscal Code); 4 Pa. Code §§2.31-2.40): 30 days after receipt of a proper invoice when the contract sets no due date, with a 15-day grace period before interest. Late interest: Interest penalties at the rate the Secretary of Revenue sets for overdue taxes; required for qualified small businesses (100 or fewer employees) that mark their invoices as such. Public construction falls under Chapter 39 of the Commonwealth Procurement Code (62 Pa.C.S. §3931 et seq.): progress payments within 45 days of the application when the contract is silent, and primes pay subs within 14 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 Pennsylvania 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, Mechanics' Lien Law of 1963, 49 P.S. §1101 et seq.): Generally within 6 months after completion of the claimant's work. To enforce: Generally within 2 years after the lien claim is filed.
- Preliminary notice: On projects of $1.5MM or more where the owner filed a Notice of Commencement in the State Construction Notices Directory, subs must file a Notice of Furnishing within 45 days of first work. Subs must also give the owner formal written notice at least 30 days before filing a lien.
- Private prompt pay (Contractor and Subcontractor Payment Act, 73 P.S. §501 et seq.): owner to contractor: per the contract; if the contract is silent, 20 days after the end of the billing period or 20 days after delivery of the invoice, whichever is later; contractor to sub: 14 days after receipt of each progress or final payment, or 14 days after the sub's invoice, whichever is later; late interest: 1% per month on late payments, plus a further 1% per month penalty and attorney fees if payment was wrongfully withheld.
- Public projects (Public Works Contractors' Bond Law of 1967, 8 P.S. §191 et seq.): you cannot lien public property, so payment bonds take its place. Bond required: Public works contracts over $5,000. Claim notice: Claimants without a direct contract with the prime must give written notice to the prime within 90 days after last furnishing; suit generally within 1 year.
- 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 Pennsylvania business know?
- Commonwealth agencies owe interest on late invoices only to qualified small businesses (100 or fewer employees) that state that status on each invoice, so add the statement if you qualify.
- Subs on private projects of $1.5MM or more lose lien rights if they skip the 45-day Notice of Furnishing when a Notice of Commencement was filed in the State Construction Notices Directory.
Questions people ask
Is invoice factoring legal in Pennsylvania?
Yes. Factoring is a sale of receivables governed by Pennsylvania's version of UCC Article 9 (13 Pa.C.S. Division 9). The funder files a UCC-1 with the Department of State and notifies your customers to pay it directly. Pennsylvania has no commercial financing disclosure law in effect, so the written contract is what defines your fees and exit terms.
Does Pennsylvania require a disclosure for factoring deals?
Not as of November 2026. HB 639 would add small business financing disclosures to the Loan Interest and Protection Law, but it has sat in the House Commerce Committee since February 2025, and earlier versions died. Until something passes, ask each funder for the advance rate, every fee and the total dollar cost at your volume in writing.
Where do I search for UCC liens in Pennsylvania?
UCC financing statements are filed with the Department of State's Bureau of Corporations and Charitable Organizations in Harrisburg, through its online Business Filing System. An official search request costs $12 per debtor name. Search your exact legal name. Fixture filings tied to real estate are recorded with the county recorder of deeds instead.
How fast do Pennsylvania state agencies pay invoices?
When a contract sets no due date, Commonwealth agencies generally must pay within 30 days of a proper invoice, with a 15-day grace period before interest. Interest penalties are owed to qualified small businesses with 100 or fewer employees that say so on the invoice. Construction contracts follow the Procurement Code's separate 45-day rule.
How fast can a Pennsylvania 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
- Pennsylvania Department of State, Uniform Commercial Code
- 4 Pa. Code Subchapter B, interest penalties for late payments
- Pennsylvania General Assembly, HB 639 (2025-2026)
- Levelset, Pennsylvania prompt payment requirements
- Levelset, Pennsylvania lien law FAQs
- Levelset, Pennsylvania bond claim FAQs
- Venable, state commercial financing disclosure laws (March 2026)
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.