Prompt payment statutes are laws that require the payment of contractors and subcontractors within a certain period of time, and prescribe interest and penalties for late payments. In some states these laws only apply to public works construction projects that are funded by the government—and sometimes only to public works projects over a certain dollar amount. There is also a federal Prompt Payment Act for federal construction projects.

In Michigan, prompt payment statutes are designed to ensure that contractors and subcontractors are paid in a timely manner for their work on construction projects. Michigan's Public Act 187 of 1984, as amended, specifically addresses prompt payment in the context of public construction contracts. This act requires that a contractor who has performed in accordance with their contract must be paid within 30 days after the public entity's receipt of a detailed sworn statement from the contractor. If payment is not made within this time frame, interest may accrue at a rate outlined in the contract, or if not specified, at a rate of 1% per month. For private construction projects, the terms of payment are generally governed by the contract between the parties. However, if a payment dispute arises, Michigan's Builders' Trust Fund Act can come into play, which requires that funds paid to a contractor for labor or materials for a construction project be held in trust for payment to subcontractors or suppliers. The federal Prompt Payment Act also applies to federal construction projects, ensuring timely payment to contractors and subcontractors, with interest penalties for late payments.