Skip to main content


Welcome to Numetrica's Blog — your hub for expert insights on accounting, bookkeeping, finance, and business strategies.
4 minutes reading time (765 words)

Another HST/GST misunderstanding that causes a huge negative cash flow

A little misunderstanding about HST is causing a lot of cash flow issues for many small businesses. Even worst some tax accountants have also misunderstood this concept and are not warning their clients.

When new clients come to us, after we migrate their data to QuickBooks Online and attach and integrate a few superpower apps such a Wagepoint, Receipt Bank, and a few more apps. we analyze their data as well and go through a few checkups. We have noticed and discovered that almost all of them have filed their HST incorrectly and inadvertently put themselves in a cash flow issue.

(Updated) So periodically, review your sales and collectable and remove the uncollectible sales and consequently the HST that was recorded on those sales.  The ITCs must be reflected as an adjustment on the HST submission form.

The Scenario

As Numetrica City expert, I’ll give you this hypothetical scenario and you can see clearly why they are not doing right.

Let’s assume that you have created a new software and it is amazing and you have made a few sales. One of your clients puts a huge order for $1,000,000. You send the invoice and charge $130,000 for HST.

Updated: CRA suggest to claim the 130K of HST uncollectible as an adjustment.

The order has come at the end of your Q3, and your client said he’ll pay the bill soon.  So now you are ready to file your HST. Just based on this invoice alone, your HST owing could be $130,000. Your firm completes the HST form and submit and pays? How? I guess you had gone to the bank and got a loan or maybe had $130,000 in the bank to pay for your HST bill.

Let’s make this a bit more exciting, the client cancels the sales, he had an option to cancel at any time if he wasn’t happy with the software. So, you now have to either adjust your completed HST form or make an adjustment on the next remittance 3 months later. Meanwhile, bank is charging you interest, if you have not paid the CRA yet, they are charging you interest as well. Even worst, guess who is going to order an audit when you ask CRA to give you back your $130,000?

Impact on cash Flow

This is a huge mess, you have got a loan for $130,000, paying interest, cash flow is a down significantly, may even get a CRA audit, ….

So how to avoid this?
2 solutions,

  1. As soon as you sign a big contract, collect the HST and pay CRA so you are cash flow is not negatively affected.
  2. As soon as you find out that the sales is cancelled, adjust sales and HST and adjust your next HST filing.


The Solution

One of the features in QBO when you are generating an HST report, asks if you are using accrual or cash basis, choose the correct option and file your HST right.

We had a client that had a huge cash flow problem, it was a great company, they were growing very fast and needed cash for their projects. They owed a lot of money to CRA because they were filing their HST wrong. No one in management had even looked at the HST numbers and asked do we even have this money? I guess they were happy that they were successful and had great sales numbers but didn’t know the concept.  When the president and his CFO an accountant asked me how they can improve their cash flow, I looked at their HST numbers and forms and said well, you are filing this wrong. So we went through accounts receivable, identified the uncollectible sales and adjust the numbers and HST accordingly.

At the beginning I said another HST misunderstanding. The other one is Quick Vs Regular method, What?!!!!!! 😊

An update to this scenario.

There was a comment from Nate (Thanks Nate) that my suggestion was wrong.  I called CRA at 1 800 959 8287 and present them with a hypothetical situation.

You charge a client $1M dollars to build something.
So you issue an invoice for $1M and the HST on that is $130K.
Let’s say you file your HST monthly.
You haven’t being paid but you owe $130K.
no problem, you borrow the money from the bank and pay CRA.
The buyer cancels the order.

CRA suggestion: adjust your next HST filing.

This will definitely put a cash burden on the company. read the 2 solution suggestions above.

Want to learn about superpower apps? 

Why should you go paperless?

Stay Informed

When you subscribe to the blog, we will send you an e-mail when there are new updates on the site so you wouldn't miss them.

7 Crucial Superpowers To Master to Run a Bulletpro...


No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Friday, 14 June 2024

One-Stop Shop for Accounting
and Bookkeeping in Ottawa

Frequently Asked Questions - FAQs

Does Numetrica offer tax services for small businesses in Ottawa?

Absolutely! Numetrica is your expert small business accountant in Ottawa, dedicated to providing exceptional tax services tailored for the unique needs of small businesses. We are committed to delivering expert tax preparation, accurate filing, and insightful strategic planning. Our tax services are designed to efficiently minimize tax liabilities and enhance deductions, ensuring that your small business not only adheres to the latest tax regulations but also optimizes financial opportunities.

What makes Numetrica different from other accounting firms in Ottawa?

Numetrica stands out as a leader among accounting firms in Ottawa for our personalized approach & comprehensive expertise in accounting & bookkeeping services. We focus on building long-term relationships with our clients, offering customized solutions that evolve with your business.

What accounting services does Numetrica offer in Ottawa?

Numetrica provides a comprehensive range of bookkeeping and accounting services in Ottawa, including financial statement preparation, tax planning, payroll services, and business coaching.

Our Ottawa accounting firm specializes in both personal tax and corporate tax services, providing tailored solutions to meet the specific needs of your business or personal finances. Whether you're a growing business seeking robust corporate tax strategies or an individual in need of personalized tax guidance, Numetrica is equipped to deliver excellence.

How can Numetrica's bookkeeping services benefit my business in Ottawa?

Our bookkeeping services in Ottawa offer meticulous record-keeping and financial analysis, helping you make informed decisions, maintain cash flow, and streamline your financial processes. We use the latest software and practices to ensure your finances are managed efficiently.

How much does bookkeeping cost in Ottawa?

The cost of bookkeeping services in Ottawa can vary widely depending on several factors such as the size of your business, the volume of transactions, the complexity of your financial needs, and the level of expertise required.

Contact us detailed quote based on your specific business needs. Remember, investing in professional bookkeeping can save you time and money in the long run by ensuring accurate financial records and compliance with tax laws.

Numetrica Accounting

Awards / Featured On

CPA - Chartered Professional Accountants


Check what some of our clients are saying about our services.
  • Samantha Biron

    I highly recommend Moe Tabesh. His service is phenomenal, to say the least. His tax knowledge is extensive and he’s been able to save me a substantial amount of money by following his recommendations. In addition, he is warm, kind, understanding, positive, and flexible, which are qualities I find rare in most accountants I’ve worked with. You’re in good hands with Moe, I can’t recommend him enough.

    Samantha Biron

    President and Founder, Find Your Tribe
  • Jeremy Prudhomme

    Moe and everyone at Numetrica have been incredible at helping with my new corporation and corporate and personal tax returns and my other small business. Their accounting skills are out of this world and the technology they use makes everything so simple and fast. The time you will save will be worth every penny. Thanks again Moe for all your help!

    Jeremy Prudhomme

    CEO, Jeeman TV
  • Farshid Dehnavi

    Mr Tabesh (Captain Number Cruncher) and his perfect team are not only professional in their fields, they are extremely passionate about their clients! Numetrica City continues to support us with corporate and personal tax returns, bookkeeping (thank you so much Sherry ) and We are so happy and appreciative for you and your responsible team, Moe!!!
    I really recommend these guys to everybody.

    Farshid Dehnavi

    President and CEO, Ink Plus
  • Keddy Declan

    I did my first Corporate tax return and cloud accounting with Numetrica City and I am very satisfied with the work they did. The team was very responsive and answered all my questions. I 1000% recommend their services.

    Keddy Declan

    CEO , IT Referrals
  • Sibeso Kehinde

    I would highly recommend Numetrica City-Accountants, Tax and Bookkeepers. Exceptional customer service. I am assured that all my company tax services and payroll are taken care of because of the great team that Moe has. I like the fact that I do not have to worry about driving to a physical location for my accounting services, my company's accounting tax preparations are done online due to the excellent cloud service Numetrica City has. Definitely score a10/10. Thank you for all the good work that you guys do. Greatly appreciated!

    Sibeso Kehinde




    We’d love to hear about your goals and aspirations. After understanding the big picture, we’ll dig into the details of your bookkeeping process so we can assess your needs.


    Once we understand your needs, we’ll send over a proposal that outlines our plan for tackling your challenges and a fixed monthly price for those bookkeeping services.


    Once you accept our proposal, we’ll get your bookkeeping tidied and up to date and begin implementing cloud accounting tools that will ensure proper bookkeeping going forward.
    Get Connected

    Get Connected

    Once the set-up is done, the hard part is over. You’ll be connected to your CPA-level bookkeeper and they will become your main point of contact.


    Once the clean up is done, the hard part is over. You’ll get connected to your bookkeeper and he/she will become your main point of contact. Don’t worry, we only select the best CPA or CPA students.

    Your Unfair Advantage

    Stay up-to-date on the latest accounting news, tax updates, and financial tips. Stay ahead of the game and make informed financial decisions with our expert insights and analysis. Sign up now to start receiving our newsletter!

    Join our family


    Carling Dental
    David Pratt
    Vitallab Solutions
    Smiles by Pocock
    Samuel Associates
    Downtown Dental

    Trust in the superhero accountants of Numetrica to keep your numbers in order and for expert advice on growing your business. Numetrica specializes in providing clients with in-depth accounting and bookkeeping services in Canada and the United States as well as financial advice to assist you in making the right decisions for your business.