---
title: "Aerospace Invoice Factoring for Parts Suppliers and Aviation Contractors"
url: "https://www.fundbetter.com/blog/aerospace-factoring/"
description: "How aerospace factoring works for parts suppliers, machine shops and MRO shops, and which invoices qualify."
---

[Blog](https://www.fundbetter.com/blog/) [Industry Funding](https://www.fundbetter.com/blog/category/industry-funding/)

# Aerospace Invoice Factoring for Parts Suppliers and Aviation Contractors

 November 13, 2026 9 min read by [FundBetter](https://www.fundbetter.com/) Share

Aerospace factoring, also called aviation factoring, is the sale of unpaid business invoices from an aerospace parts supplier, machine shop, maintenance, repair and overhaul (MRO) shop or aviation service contractor to a funding partner, which advances part of the invoice value and then collects payment from the customer. The supplier turns parts it has already shipped, or work it has already signed off, into cash without waiting out a large buyer's payment terms.

The focus here is commercial receivables: invoices to OEMs, tier-one and tier-two suppliers, airlines, charter operators and fixed-base operators (FBOs). Invoices billed directly to a federal agency are a separate subject, since federal assignment has its own rules.

## Why aerospace suppliers wait so long to get paid

For [manufacturing businesses](https://www.fundbetter.com/industries/manufacturing/), FundBetter notes that big buyers can pay on Net 60 or Net 90 while a shop's costs land right away, and that large buyers can pay past terms without treating it as late. The aerospace manufacturing sector is substantial: [sectoral output for US aerospace product and parts manufacturing](https://fred.stlouisfed.org/series/IPUEN3364T300000000) reached about $214 billion in current dollars in 2025, up roughly 7 percent from 2024, according to Bureau of Labor Statistics sectoral output data, a measure of production rather than sales revenue.

Aerospace work can stretch the wait further. A part may need to pass receiving inspection before the invoice is approved, and a first article inspection on a new part number can add review time. Some large buyers route invoices through a supplier portal, where an invoice can sit unapproved if a purchase order line, quantity or price does not match. Each step happens after the shop has paid for material, tooling and labor.

Imagine a hypothetical 22-person machine shop that wins a contract to machine aluminum fittings for a tier-one aerostructures supplier. It buys bar stock, runs the first lot over three weeks and ships a $64,000 order with its certificate of conformance. The buyer's terms are Net 90 from invoice approval. If the portal approves the invoice a week after delivery, the shop may not see that $64,000 until roughly four months after it bought the material, while it runs payroll every week and starts the second lot.

## How aerospace factoring works on a parts or MRO invoice

After the parts ship or the repair is complete, a funding partner will generally want to confirm that the work was delivered and that the invoice is approved and undisputed before it advances part of the face value, which can reach 90 percent on FundBetter's program, in as little as 24 to 48 hours once the account is set up. The remainder sits in a reserve until the customer pays, when it is released minus the factoring fee.

FundBetter's [invoice factoring](https://www.fundbetter.com/business-loans/invoice-factoring/) typically follows a common pricing structure of roughly 1 to 3 percent for the first 30 days an invoice is outstanding, followed by a further increment for each additional period. On long aerospace terms those increments add up, so the payer's actual payment speed shapes the cost.

Apply that to the hypothetical $64,000 invoice. A 90 percent advance puts $57,600 in the shop's account shortly after the invoice is approved, and $6,400 is held in reserve. Suppose the shop is quoted 1.5 percent for the first 30 days and 0.75 percent for each additional 15 days. If the buyer pays on day 88, the fee is 4.5 percent, or $2,880, and $3,520 of the reserve comes back. If a portal hold pushes payment to day 110, the fee rises to 6 percent, or $3,840. Those rates are illustrative only. Ask any funder for the all-in cost on a sample invoice at 60, 90 and 120 days, including setup, wire or ACH, lockbox and monthly minimum fees.

Proof of delivery in aerospace can involve more than a signed bill of lading. A funder verifying a parts invoice may ask for the purchase order, carrier proof of delivery, the certificate of conformance and, where the order required them, material certifications or a first article inspection report. For a repair shop, the signed work order and return-to-service paperwork can serve the same purpose. Quality records filed by purchase order and invoice number, plus portal screens showing an invoice as approved, help a funder verify quickly.

## Which aerospace and aviation invoices can be factored

Factoring centers on completed, accepted work billed to a business customer on clear terms. Aerospace suppliers and aviation contractors can carry several kinds of receivables, and a funder is likely to treat them differently.

| **Invoice** | **Aerospace example** | **Likely treatment** |
| --- | --- | --- |
| Production parts invoice to an OEM or tier-one supplier | Machined brackets that passed receiving inspection and show as approved in the portal | Closest to the standard case: accepted parts, a commercial payer and set terms |
| Parts invoice with an open rejection | A lot held under a nonconformance report pending rework or review | Likely held back until the rejection is resolved or a credit is issued |
| Tooling, fixtures or engineering billed on milestones | A tooling package paid in stages as qualification steps are approved | Harder to advance, since milestones complicate what has been earned |
| MRO invoice to an airline or charter operator | Component overhaul or scheduled maintenance completed and released | Can qualify once the work is complete and the invoice is accepted |
| Aviation services invoice to an FBO or operator | Contract line maintenance, aircraft detailing or ground support billed monthly | Can qualify where service is documented and the payer is creditworthy |
| Repair invoice to an individual aircraft owner | An annual inspection billed to a private owner personally | Harder to advance, since factoring is built around B2B receivables |
| Invoice billed to a federal agency | Parts or services sold directly to the government | A separate case governed by federal assignment rules |

FundBetter says milestones and retainage complicate advances and that progress bills and consumer invoices are harder to advance. For invoices billed to a government agency, FundBetter's guide to [government contract factoring](https://www.fundbetter.com/blog/government-contract-factoring/) explains the federal assignment framework and the steps it requires.

## Rejected parts, portals and concentration on one buyer

When a buyer's inspection rejects a lot, the invoice may be short-paid, held or offset with a debit memo, and if the funder has already advanced against that invoice, the shortfall has to be made up. FundBetter notes that non-recourse cover typically responds only to customer insolvency, not to slow payment, disputes or the seller's own delivery failures. A rejected lot normally stays the shop's problem under either structure, and the shortfall may come out of the reserve or a later advance. A shop with frequent returns or debit memos may find a funder reviews that history before setting terms.

Concentration is the second issue, since a small aerospace shop may depend on one OEM program or a single tier-one customer. Per-customer concentration limits, often around 30 to 40 percent of the advanced total according to FundBetter, restrict how much one buyer's invoices can count. A shop that sends 70 percent of its billings to one aerostructures supplier could see part of that account fall outside the facility, even when the buyer's credit is strong.

Supplier portals add a practical step. Most factoring is notified, so the buyer receives a notice of assignment directing payment to a new account. At a large OEM or tier-one supplier, changing remittance details can mean updating the vendor record through the buyer's supplier onboarding process, so raise it with the funder early. Non-notified factoring may be possible, though FundBetter says it requires stronger financials.

A blanket purchase order with scheduled releases creates a receivable only as each release ships and is invoiced. A funder advances against invoices, not open order backlog.

## Fund Your Next Production Run with FundBetter

FundBetter is a national small business lender and funding marketplace, founded in 2018 and based in Miami. It may fund directly or connect a business with third-party lenders and funding partners, depending on which is the better fit, with funding from $5,000 to $5 million across eight products. Factoring is assessed differently from the other products: the weight sits on your B2B invoices and the credit quality of the customers behind them rather than on your own financial profile alone. FundBetter's factoring criteria start at six or more months in business and center on eligible B2B or government invoices and a creditworthy customer base. Invoice eligibility, concentration and any existing liens on receivables also affect what can be funded. Those are FundBetter's criteria rather than general lending requirements, and they vary by product. Checking your options uses a soft inquiry that does not affect your credit score; a hard inquiry happens later, with your permission, only on certain offers.

Parts suppliers and MRO shops waiting on approved invoices from large buyers can start with [invoice factoring](https://www.fundbetter.com/business-loans/invoice-factoring/). A shop adding a five-axis machining center, a coordinate measuring machine or inspection equipment to win a new program may be better served by [equipment financing](https://www.fundbetter.com/business-loans/equipment-financing/), while a shop with steady billings and stronger financials that would rather keep its buyers out of the arrangement may prefer a [business line of credit](https://www.fundbetter.com/business-loans/business-lines-of-credit/).

A strong buyer can still leave you short if most of your billings go to one account. [See what you qualify for](https://www.fundbetter.com/apply/) with your customer list and payment terms ready, and if a single OEM or tier-one supplier accounts for most of your invoices, call us at [786-882-2705](tel:+17868822705) to talk through how concentration would apply to your receivables.

## Frequently asked questions

 Can a machine shop factor invoices to an aerospace OEM?

It can, if the parts have shipped, the invoice is approved and the shop has six or more months in business under FundBetter's criteria. Your customers' credit carries most of the weight, which can help a smaller shop that would struggle to qualify for a bank loan.

 What documents does a funder ask for on an aerospace invoice?

A funder may ask for the purchase order, the invoice, proof of delivery and, where the order called for them, the certificate of conformance, material certifications or first article inspection report.

 What happens if the customer rejects a lot after it was funded?

The rejected amount normally comes back to you under both recourse and non-recourse arrangements, since non-recourse cover typically responds only to customer insolvency. The funder may recover it from the reserve or offset it against a later advance.

 Can I factor invoices billed directly to a federal agency?

FundBetter's factoring criteria include government invoices, but federal assignment has its own rules and notice steps. FundBetter's guide to government contract factoring covers how that framework works.

 Will factoring work if one tier-one customer pays most of my invoices?

It can, though concentration limits may cap how much of that customer's balance a funder will advance. Ask how the limit would be measured on your ledger.

## Related funding options

 [Invoice Factoring](https://www.fundbetter.com/business-loans/invoice-factoring/)[Equipment Financing](https://www.fundbetter.com/business-loans/equipment-financing/)[Business Lines of Credit](https://www.fundbetter.com/business-loans/business-lines-of-credit/) [Manufacturing funding](https://www.fundbetter.com/industries/manufacturing/) ★★★★★4.9 stars from real business owners Ready to apply for your business funding? Compare 8 funding options with one application and a real advisor. Funds in as little as 24 hours, no impact to your credit. [Apply Now](https://www.fundbetter.com/apply/) [or call 786-882-2705](tel:+17868822705)

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