The common footing: UCC Article 9
U.S. factoring rests on Article 9 of the Uniform Commercial Code, enacted by all three states in materially identical terms. Two rules do the work. First, once the general contractor or owner receives a notification — signed or otherwise authenticated by you or the factor — that the receivable has been assigned and payment is to be made to the factor, only paying the factor discharges the debt. Second, a contract term that prohibits, restricts, or requires consent to assigning a receivable is ineffective, as is any term making the assignment a default or a defense. An anti-assignment clause in a subcontract therefore does not stop you factoring the billing. One corollary: the account debtor may demand reasonable proof of the assignment and, until the factor furnishes it, may keep paying you — so factors send notice and proof together. That is the uniform layer; the state differences sit on top of it.
Factoring in Texas: trust funds, contingent payment, and a 2025 twist
Texas layers several statutes onto a factored billing. Under the Construction Trust Fund Act, construction payments made to a contractor or subcontractor are trust funds, the recipient is a trustee, and the subs and suppliers on the job are beneficiaries; a trustee who knowingly diverts them without first fully paying the job's current or past-due obligations has misapplied them, with criminal exposure — though it is a defense that the money went to the trustee's actual expenses directly related to the job. The factor's advance is not itself a construction payment, but the payments the factor collects from are, so your duty to keep the job's subs and suppliers paid current out of them survives factoring — which is why a Texas factor wants the advance visibly funding the job. Then a 2025 amendment, effective September 1: a beneficiary's assignment of its interest in unpaid trust funds is enforceable only if made in writing, outside the construction contract, after the assignee has paid in good funds, to an assignee that is itself a beneficiary, trustee, or owner on the same project, with written notice to owner and contractor within seven days. So a third-party factor buys the receivable under Article 9 but does not generally step into your trust-fund beneficiary standing — ask a Texas factor to explain the distinction. Finally, Texas enforces pay-if-paid clauses by default but not where the payor's own breach caused non-payment, not for work after your written objection notice takes effect (sendable 45 days after a proper request), not in sham relationships, not where unconscionable, and never to defeat a mechanic's lien — though none of those limits reach one-to-four-family residential or civil and road work, which the chapter excludes. Prompt pay on private work runs 35 days owner-to-contractor and seven days down, at 1.5 per cent a month if late — but oil, gas, and mineral work is exempt entirely, so oilfield subs get no statutory clock. Retainage: the owner reserves 10 per cent during the work and for 30 days after completion.
Factoring in Virginia: misapplication is larceny, pay-if-paid is void
Virginia does not use trust-fund language but gets to a similar place by a criminal route: a contractor or subcontractor who, with intent to defraud, uses funds paid under a construction contract for anything but the labour and material on that job while those bills remain unpaid is guilty of larceny — and using the money elsewhere first is prima facie evidence of the intent. Since 2020 the same section adds a civil claim, but only for a party in contract with the offender, and it voids any contract term that lets a payer withhold money due on one contract for claims arising on another. On the payment clock, Virginia requires owners to pay a general contractor within 60 days of invoice (withholding notice within 45), and general contractors to pay subs within the earlier of 60 days of invoice or seven days after being paid — and, for contracts executed on or after January 1, 2023, it makes payment by the party above your contractor — the owner, at first tier — not a condition precedent to paying you, unless that party is insolvent or in bankruptcy. Any contrary clause is unenforceable. Two more Virginia specifics: public retainage is capped at five per cent, but private retainage has no statutory cap; and an old, still-live provision makes every assignment by a contractor of money coming to it under the contract subject to the mechanics' liens of those below it — so a factored receivable sits behind unpaid subs' lien rights, another reason a factor wants your subs paid current.
Factoring in Georgia: fast clocks, enforceable pay-if-paid, and the 90-day waiver
Georgia's Prompt Pay Act carries the fastest owner deadline of the three — 15 days from a payment request, then ten days for the contractor to pay subs, with interest at one per cent a month — but read the fine print before pricing a receivable on it: the Act's terms are defaults the contract can override, interest is owed only if the pay request gave notice of the provision, accepting a payment releases interest claims on it, and residential work of twelve or fewer units is excluded. Georgia also enforces pay-if-paid: long-standing Court of Appeals precedent holds that a subcontract may make owner payment a condition precedent to the sub's payment where the clause expressly and clearly says so, and no Georgia statute bans it — the lien statute even acknowledges such clauses. There is no civil construction trust-fund statute; misapplying construction payments with intent to defraud is a felony (though the court may punish it as a misdemeanour), and failing to pay is prima facie evidence of the intent — a criminal statute, not a trust. And then the trap that matters most to anyone collecting a Georgia receivable: a signed lien waiver becomes conclusively binding — you are deemed paid whether or not the money arrived — on the earliest of actual receipt, a written acknowledgment, or 90 days after signing, unless you file an affidavit of nonpayment before the 90 days run. Since 2021 the waiver forfeits only lien and bond rights, not the contract claim itself, but a factor that let a waiver go conclusive would have lost the security behind the invoice. Liens are filed within 90 days of last work, with a copy to the owner within two business days.
What this means for the advance
Side by side, the factor's job becomes visible. In Texas, the receivable is Article 9 property but the trust-fund overlay means the advance should demonstrably fund the job, and a pay-if-paid clause is live unless a statutory limit applies. In Virginia, the pay-if-paid ban and the sixty-day owner clock make a clean, invoiced receivable comparatively strong — but the assignment takes subject to downstream liens, so the factor will check that subs are current. In Georgia, the speed of the statutory clock is offset by how easily it is contracted away, and the 90-day waiver rule means the factor will track every waiver you sign against every payment you receive. In all three, retainage — ten per cent on private work in Texas by statute, whatever the contract says in Virginia and Georgia — is not advanceable up front, and lien deadlines run from the last day of work, not the invoice. Arrive with the payment clause flagged, waivers matched to payments, subs current, and billings on the statutory clock, and you are funded on the net billing in days; arrive with a signed unconditional waiver on an unpaid invoice and you are not.
How Crewline fits, and where the Canadian guide picks up
Crewline's role in these three states is the fit: matching a contractor to a factor that funds construction receivables and understands the state's payment law, rather than a general-purpose factor that declines the file at the first pay-if-paid clause. The cash gap is the same on either side of the border — money out for crews and materials before the draw clears — and so is the discipline: bill on the statutory clock, keep subs current so nothing sits ahead of your receivable, and never let a signed document outrun a payment you did not receive. The Canadian version of this guide covers holdbacks, proper invoices, trust funds, and set-off under the provincial Acts. Either way the rule holds: the factor advances against the portion of the receivable it can count on, and everything a contractor does to make that portion larger shows up in the advance rate.
Questions operators ask
Can a subcontract stop me from factoring my invoices in Texas, Virginia, or Georgia?
No. All three states have enacted UCC Article 9, under which a contract term that prohibits, restricts, or requires consent to assigning a receivable is ineffective. Once the account debtor is notified of the assignment, it can discharge the debt only by paying the factor.
Are construction payments trust funds in these states?
Only in Texas, by statute — payments to a contractor or sub are trust funds for the subs and suppliers on the job, and diverting them is misapplication. Virginia and Georgia instead make misapplication with intent to defraud a crime (larceny in Virginia, a felony in Georgia); Georgia has no civil trust-fund statute at all.
Is a pay-if-paid clause enforceable against a factored invoice?
It depends on the state. For contracts since 2023, Virginia bars making payment from the tier above a condition precedent to paying subs (barring that party's insolvency), so pay-if-paid is unenforceable there. Georgia enforces a clear, express clause. Texas enforces them by default but with statutory limits — including a written objection notice you can send 45 days after submitting a proper payment request, which bars the clause for work after the notice takes effect.
What is Georgia's 90-day lien waiver rule?
A signed lien waiver becomes conclusively binding — you are deemed paid even if you were not — on the earliest of receiving the money, signing a written acknowledgment, or 90 days after execution, unless you file an affidavit of nonpayment first. For a factor, an unmatched waiver can wipe out the lien security behind the invoice.