Akshay Shrimanker, our Founder and CEO, recently joined Blake Oliver, David Leary, and a panel of other accounting experts (Mike Moiśe CPA, Matthew May CPA, and Reynaldo Arellano CPA) on a special episode of the Cloud Accounting Podcast. With everything that’s been in the news recently, we’ll bet you can guess the topic they discussed: the Silicon Valley Bank (SVB) collapse.
The goal of this special podcast episode was to help accountants manage the fallout, but the guidance was broadly applicable. As a result, we thought it would be well worth passing the tips and tricks shared onto you. If you haven’t had time to listen to the episode yet, here are the key takeaways.
The immediate impact
After $42 billion was pulled from SVB accounts, the writing was on the wall. Fortunately, regulators stepped in to mitigate the impact. Still, this collapse isn’t without its repercussions. Here’s a quick synopsis of what happens now:
- If you had money in SVB accounts, you’ll be made whole. Regulators guaranteed deposits over the $250,000 FDIC limit, so companies don’t need to worry about significant losses there. But there’s no bailout for SVB investors.
- Countless apps are affected. Apps were using SVB to move money around. In fact, because the bank was technologically advanced, many developers preferred their API. As a result, a number of apps — including accounts payable, accounts receivable, and payroll apps — leveraged SVB, often without the users ever knowing the bank was part of the app’s programming. Bluevine, for example, a totally separate bank, used SVB to store funds for their bill pay app. Rippling, Patriot Software, Bill.com, Melio, Etsy, and more were reliant on SVB in some way. Fortunately, because of the bailout, that money should still come through, but it may be delayed.
- Account reconciliation starts now. March 10 was the day everything hit the wall. Reconcile all of your accounts around that date so you know what was coming in and going out, and can track down anything that might need your added attention.
Navigating what’s ahead
If you had one or more SVB accounts, the podcast panel gave some tips to minimize disruptions at your business.
- Pull the data from your accounts now. The SVB site went down for a time, but it’s back up now. Log in and get everything you can, from account numbers to bank statements, while you have the option.
- Set up alternative bank accounts. You need a place to deposit money that isn’t under SVB, so if you’re not already banking with someone else, open up a new account. Ideally, you don’t want more than $250,000 at any given bank, so the full amount of all of your deposits is protected by FDIC insurance. This likely means having multiple banking partners. Sweep accounts can also help. We have a blog that can help you dig deeper into protecting your money against future crises in this way.
- Reroute where money coming in is going. Think through how clients and customers pay you (e.g., Quickbooks Payments, Stripe, Square, Chargify). If any of these accounts are depositing proceeds into a now-frozen SVB account, reroute them to go to your other/new bank.
- Change your payment accounts. Also, make sure nothing is going to try to pull money from your frozen SVB account. This includes tools like Bill.com, Rippling, and Gusto.
- Read the FDIC’s FAQs. They’re a great resource to understand what regulators are doing to stabilize the situation.
During the podcast, Akshay also specifically recommended planning for future crises. The rapid collapse and far-reaching fallout had people trying to send wires at breakneck speed. Many quickly realized that with the SVB site down (although it is back up now), they didn’t even know their account or routing numbers.
At your startup, make sure there’s a clear delineation of roles as far as who handles the finances. Then, ensure that whoever has that responsibility knows all of the details about all of the applicable accounts. Don’t assume the bank or software will always be around to store your information for you. Develop a secure system to store key details like account and routing numbers.
Finally, don’t panic. You need to move quickly, but be thoughtful as you move forward and be wary of fraud. Unsavory players will always try to take advantage of chaos like this.
If you have any questions about what the SVB collapse means for you, or you want help navigating the coming weeks, don’t hesitate to contact us.