Use case

GST/HST and payroll remittances funding: how to size it and what to watch.

A remittance due date does not move, even when a large customer pays late.

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What this looks like

A remittance due date does not move, even when a large customer pays late.

A business can collect sales tax and deduct payroll amounts correctly and still find itself short on the due date if receivables slip. Missing a remittance brings penalties and interest from the Canada Revenue Agency.

How to size it

Size the request to the remittance plus the gap until receivables arrive. If a $25,000 remittance is due and a $40,000 invoice will pay in three weeks, a short bridge covers it.

Illustrative arithmetic

A construction subcontractor depositing about $90,000 a month asks for $25,000 for a quarterly HST remittance. At a 1.2 factor the payback is $30,000, a cost of $5,000. Over roughly 4 months that is about $357 per business day, or close to 8% of monthly deposits.

Total payback: $30,000.
Cost: $5,000.
Payment: about $357 per business day, close to 8% of monthly deposits.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

Which structure tends to fit

A short advance bridges a defined remittance gap. If this happens every quarter, the fix is a cash reserve or a standing line, not repeated advances.

Where it goes wrong

Using collected tax as working capital
Bridging the same gap every quarter
Ignoring the penalty cost of paying late

Before you apply

Confirm the remittance amount and due date
List the receivables that will refill the account
Plan how to hold tax separately next quarter

Typical starting points

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Why tax money gets spent

Sales tax and payroll deductions sit in the operating account for weeks before they are due, so the balance looks healthier than it is. Many owners only notice when the remittance date arrives. A separate account for collected tax, swept weekly, removes the problem at its source and makes your statements easier to read for any lender.

Common questions

How much should I ask for?

Ask for the amount you can name in dollars and tie to a quote, invoice or schedule. A smaller, specific request is easier to approve and cheaper to repay.

Which structure is best?

It depends on whether the need is a one-time purchase or a recurring gap. See the comparison pages for the trade-offs.

How fast can I get it?

Decisions are often the same day on a complete file, and funding can follow the next business day.

Keep reading

Funding use casesPayroll, inventory, expansion and more Merchant cash advance CanadaHow an advance against future card sales works Revenue-based financing CanadaRepay a fixed multiple as a share of revenue Cash-flow affordability calculatorCan the month carry the payment?Underwriting situationsCredit, NSFs, time in business and more

Educational information only. It is not legal, tax or accounting advice.

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