| Disclosure law | None |
|---|---|
| UCC filing office | Business Services Division, Indiana Secretary of State (Indianapolis) |
| State agencies pay | By the date in the contract; if none, within 35 days after receipt of the goods or services or a properly completed claim |
| Late-pay interest (state) | 1% per month late payment penalty, added to principal every 30 days |
| Lien deadline (private) | Generally 90 days after last furnishing labor or materials; 60 days on residential (Class 2) projects |
| Public payment bond | State public works contracts estimated over $200,000 require a 100% payment bond; below that the state may require a bond or 10% retainage |
Who uses invoice factoring in Indiana?
Indiana is one of the most manufacturing-heavy states, and most factored invoices trace back to large industrial buyers. Auto plants such as Toyota in Princeton and Subaru in Lafayette buy from a deep tier of parts suppliers. Elkhart County builds most of the country's recreational vehicles, steel mills ring Lake Michigan in the northwest, and Eli Lilly and Cummins anchor Indianapolis and Columbus. Indianapolis is also a major distribution hub for trucking and warehousing. Federal payers include Naval Surface Warfare Center Crane and Grissom Air Reserve Base.
OEMs and tier-one suppliers often pay on net 45 to net 90 terms, which squeezes smaller machine shops, staffing firms and carriers. RV demand is seasonal and cyclical, so Elkhart suppliers see sharp swings in volume. State agencies must pay within 35 days of a proper claim unless the contract sets a date, and agriculture suppliers peak around spring planting and fall harvest.
- Industries that factor most: Automotive parts manufacturing, Recreational vehicle manufacturing, Steel and metals, Pharmaceuticals and life sciences, Logistics and warehousing, Agriculture.
- Metro areas: Indianapolis, Fort Wayne, Evansville, South Bend, Elkhart, Lafayette, Gary and Northwest Indiana.
- Federal installations that buy from local firms: Naval Surface Warfare Center Crane, Grissom Air Reserve Base, Camp Atterbury (Indiana National Guard).
Does Indiana regulate invoice factoring?
Indiana 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 Indiana?
Where UCC-1s are filed in Indiana: Business Services Division, Indiana Secretary of State (Indianapolis). Filings are made through the state's INBiz portal; the public UCC search lets you search by filing number, debtor name or secured party name.
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 Indiana 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 Indiana pay?
Indiana state agency deadline (Ind. Code §5-17-5): By the date in the contract; if none, within 35 days after receipt of the goods or services or a properly completed claim. Late interest: 1% per month late payment penalty, added to principal every 30 days. Local claims that need board approval are due 35 days after the first regular meeting held at least 10 days after receipt. Public works contracts of $200,000 or more fall under Ind. Code §5-16-5.5: progress payments within 35 days of a proper request and first-tier subs paid within 10 days of the prime's 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 Indiana 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, Ind. Code §32-28-3): Generally 90 days after last furnishing labor or materials; 60 days on residential (Class 2) projects. To enforce: 1 year after the lien is recorded, or 30 days after receiving an owner's written notice to sue.
- Preliminary notice: Required only on owner-occupied 1 to 2 unit homes: subs and suppliers must notify the owner within 30 days of first furnishing on remodels, or within 60 days (with a copy filed with the recorder) on new construction.
- Private prompt pay: we could not verify a general private construction prompt payment law in Indiana; your subcontract's pay terms control.
- Public projects (Ind. Code §4-13.6-7 (state public works) and Ind. Code §5-16-5): you cannot lien public property, so payment bonds take its place. Bond required: State public works contracts estimated over $200,000 require a 100% payment bond; below that the state may require a bond or 10% retainage. Claim notice: File a verified claim with the public body and deliver a copy to the contractor within 60 days after last furnishing; suit cannot start until 30 days after the claim is filed.
- 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 Indiana business know?
- Under Ind. Code §5-17-5-4, a contractor whose payment from a state agency is late must pass 1% per month interest down to its subcontractors once it receives the payment and penalty.
Questions people ask
Is invoice factoring legal in Indiana?
Yes. Factoring is a sale of accounts receivable under Indiana's version of UCC Article 9, and Indiana has no special license or disclosure requirement for commercial factors. A factor normally files a UCC-1 with the Indiana Secretary of State and notifies your customers to pay it directly. Fees, advance rates and recourse terms come from the contract.
Does Indiana require a disclosure for factoring deals?
No. As of November 2026 Indiana has not enacted a commercial financing disclosure law, so a factor does not have to give you a state-mandated cost or APR form. Neighboring Illinois has proposed one but not passed it. Ask any factor for a written fee schedule and an example of total cost so you can compare offers.
Where do I search for UCC liens in Indiana?
The Indiana Secretary of State's Business Services Division keeps the central UCC index. Its public UCC search (bsd.sos.in.gov/PublicUCCSearch) lets you search by debtor name, secured party or filing number, and filings are made through INBiz. Check for a bank's blanket lien on receivables before you factor, since it will need a release or an intercreditor agreement.
My customer is an auto or RV manufacturer that pays in 60 to 90 days. Can I factor those invoices?
Usually yes. Invoices to large, creditworthy OEMs are attractive to factors because the risk sits mostly with your customer. Check your supply agreement for anti-assignment or payment-direction clauses; UCC Article 9 generally overrides bans on assigning receivables, but some OEM portals require a formal change of remittance. Factoring is common among Indiana's tier-two and tier-three suppliers.
How fast can a Indiana 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
- Levelset, Indiana prompt payment FAQs
- Levelset, Indiana mechanics lien FAQs
- Levelset, Indiana bond claim FAQs
- J.T. Milton, MCA and disclosure laws by state (July 2026)
- Elite Funders, state commercial financing law tracker (September 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.