Silicon Valley Bank Fails, How Bad Will the Fallout Be?

Would you just be splitting the payroll across two banks such that if either bank failed, you’d miss payroll for some employees?

Or doubling payroll reserves such that either bank could fail and you’d still make payroll?

I suspect there’s no real barrier to doing the first, but also not much benefit.

Generally your payroll provider withdraws the whole payroll a day or two before distributing it to your employees and the tax authorities. Mine doesn't support using several accounts but perhaps the larger processors could do a custom process.

It would be unusual to set up payroll and say “pull 50% from this bank account and 50% from this other account”. I don’t know if any payroll processors support that setup. Most of the time you just connect your checking or payroll sweep bank account then set it and forget it.

Good point.

Should be a tractable problem to solve I think -- and the current SVB crisis may provide just the impetus and justification needed to develop such a solution.

There was a post yesterday saying unpaid wages pierce the corporate veil in California. This should be a big enough risk for any corporate big or small to look to diversify the risk of missing payroll due to a single-point-of-failure like SVB.

>Why would it be a problem to split payroll between multiple accounts?

Not sure why it was posed as being mandatory. The only "problem" is that it's more overhead and something to manage. It's a problem in that it will cost money to either pay a service or more treasury/finance employees to manage it

If most clients are (startup) businesses, a meager 250k FDIC insurance isn't going to do much.