| Disclosure law | None |
|---|---|
| UCC filing office | Michigan Department of State (Secretary of State), Uniform Commercial Code Section, Lansing |
| State agencies pay | Payment mailed within 45 days after the latest of receipt of the goods or services, a complete invoice, or a complete contract, unless otherwise agreed in writing |
| Late-pay interest (state) | 0.75% of the past-due amount for each month or part of a month, with no request needed from the vendor |
| Lien deadline (private) | Record a claim of lien with the county register of deeds within 90 days after last furnishing labor or materials |
| Public payment bond | Public construction contracts over $50,000 (performance and payment bonds) |
Who uses invoice factoring in Michigan?
Michigan factoring starts with the automotive supply chain. General Motors, Ford and Stellantis buy from hundreds of tier 1, tier 2 and tier 3 suppliers of stampings, castings, plastics, electronics and tooling, and those suppliers in turn buy from machine shops and logistics firms across southeast and west Michigan. The Detroit Arsenal in Warren manages Army ground vehicle programs that feed defense manufacturers. Corewell Health, Henry Ford Health and Michigan Medicine are large buyers of staffing and services, and the Ambassador Bridge and other Detroit River crossings make cross-border trucking and customs brokerage a major industry.
Auto suppliers often carry long OEM payment terms, and model changeovers, retooling and labor disputes can stall cash for months. Office furniture makers in west Michigan, agriculture (tart cherries, blueberries, apples) and Upper Peninsula mining and timber add their own cycles. Construction subcontractors have no private prompt pay statute and rely on the Construction Lien Act, which requires a notice of furnishing within 20 days.
- Industries that factor most: Automotive OEM and supplier manufacturing, Defense vehicle manufacturing, Healthcare services, Logistics and cross-border trucking, Office furniture manufacturing, Agriculture and food processing.
- Metro areas: Detroit, Grand Rapids, Lansing, Ann Arbor, Flint, Kalamazoo.
- Federal installations that buy from local firms: Detroit Arsenal, Selfridge Air National Guard Base.
Does Michigan regulate invoice factoring?
Michigan 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 Michigan?
Where UCC-1s are filed in Michigan: Michigan Department of State (Secretary of State), Uniform Commercial Code Section, Lansing. Official UCC-11 searches are run through the online portal with a MiLogin account, and the state also offers a free debtor name quick search.
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 Michigan 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 Michigan pay?
Michigan state agency deadline (MCL 17.51 to 17.57 (1984 PA 279, payments to private enterprises)): Payment mailed within 45 days after the latest of receipt of the goods or services, a complete invoice, or a complete contract, unless otherwise agreed in writing. Late interest: 0.75% of the past-due amount for each month or part of a month, with no request needed from the vendor. Applies to principal executive departments. Public construction contracts of $30,000 or more with local public agencies follow MCL 125.1561 et seq. (progress payments within 30 days of certification, with reasonable interest on late amounts); MDOT, school districts and community colleges are excluded from that act.
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 Michigan 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, Construction Lien Act, MCL 570.1101 et seq.): Record a claim of lien with the county register of deeds within 90 days after last furnishing labor or materials. To enforce: Action to enforce within 1 year after recording the claim of lien.
- Preliminary notice: Subcontractors and suppliers must serve a notice of furnishing on the owner's designee and the general contractor within 20 days after first furnishing (MCL 570.1109); late notice limits but does not always defeat the lien.
- Private prompt pay: we could not verify a general private construction prompt payment law in Michigan; your subcontract's pay terms control.
- Public projects (MCL 129.201 et seq.): you cannot lien public property, so payment bonds take its place. Bond required: Public construction contracts over $50,000 (performance and payment bonds). Claim notice: Claimants without a direct contract with the prime must give the prime written notice within 30 days after first furnishing, and notice to the prime and the governmental unit within 90 days after last furnishing, both by certified mail (MCL 129.207).
- 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 Michigan business know?
- State agency late payments carry an automatic 0.75% monthly penalty under MCL 17.54, which makes Michigan state receivables relatively predictable.
- On residential projects, only licensed residential builders and maintenance and alteration contractors have lien rights under the Construction Lien Act.
Questions people ask
Is invoice factoring legal in Michigan?
Yes. Factoring is a sale of accounts receivable, and under Michigan's version of UCC Article 9 the factor perfects its interest by filing a UCC-1 with the Michigan Department of State. Michigan has no license or disclosure law aimed at commercial factoring. Auto suppliers should check OEM purchase terms, which may limit assignment or require notice before payments are redirected.
Does Michigan require a disclosure for factoring deals?
No. As of November 2026 Michigan has not enacted a commercial financing disclosure law, and recent multistate surveys of these laws do not list Michigan. The written agreement controls, so get the advance rate, discount fee, reserve release timing, minimums and termination terms in writing before you sign.
Where do I search for UCC liens in Michigan?
Use the Michigan Department of State's UCC portal at ucc.michigan.gov, which requires a MiLogin account for official UCC-11 searches. The state charges a small fee per debtor name and also offers a free debtor name quick search. Search the debtor's exact legal name, and order copies of any filings that look relevant to see the collateral described.
I am a tier 2 auto supplier. Can I factor invoices owed by a tier 1 supplier?
Usually yes. Factors look mainly at the credit of your customer, so invoices to large tier 1 suppliers often qualify even if your business is young. Check your purchase orders for anti-assignment or setoff clauses, and expect the factor to verify invoices and send a notice of assignment. Long OEM-driven payment terms are a common reason Michigan suppliers factor.
How fast can a Michigan 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
- Michigan Legislature, MCL 17.52 (state payment deadline)
- Michigan Legislature, MCL 17.54 (late payment penalty)
- Michigan Legislature, MCL 129.201 (public works bonds)
- Michigan Legislature, MCL 129.207 (bond claim notices)
- Michigan Department of State, Uniform Commercial Code
- Levelset, Michigan lien law FAQs
- Levelset, Michigan prompt payment law
- 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.