Inhouse Payroll Processing: A Solution for Mitigating Risks Associated with Bank Failures
The recent failure of Silicon Valley Bank (SVB) and subsequent FDIC takeover has sent ripples through the tech industry and beyond. Many businesses, including those that do not even bank with SVB, are at risk of missing payroll due to their use of payroll partners who rely on SVB as their payment infrastructure. As a result, businesses and employees alike are left facing financial uncertainty and the potential for missed payments.
In situations like these, it becomes clear that having control over your payroll processing can be a valuable tool for mitigating risks associated with bank failures. By opting for inhouse payroll processing, you can ensure that your business remains in control of its finances and avoids the potential pitfalls of outsourcing to a third-party payroll provider.
One example of the potential risks of outsourcing payroll to a third-party provider is reflected in the closure of SVB, which impacted companies such as Rippling that relied on SVB's payroll payment infrastructure. As a result, Rippling was unable to fund some of their customers' payrolls, leaving many employees without their paychecks. While outsourcing payroll may seem like a convenient option, this example highlights the potential risks of relying on third-party providers and underscores the importance of having control over your own payroll processing through inhouse solutions.
An advantage of inhouse payroll processing is the ability to maintain control over your payroll operations, even in the face of unexpected events such as bank failures. By taking on the responsibility of managing your payroll internally, you can ensure that your payroll matters are customized to your business preferences, have complete control over software usage and budget, and control over security systems and information. This allows for greater flexibility and responsiveness to changing circumstances, while mitigating risks associated with outsourcing to third-party payroll providers. Additionally, partnering with an inhouse payroll provider who can take on the heavy compliance burden can be particularly beneficial and offer peace of mind to businesses considering outsourcing payroll processing.
While inhouse payroll processing may not be suitable for every business, it's important to consider the benefits of having control over your payroll processing. By taking on this responsibility inhouse, you can ensure that your business remains agile and responsive to changing circumstances, while also mitigating risks associated with bank failures and other unforeseen events.
Bank failures and other unforeseen events can be disruptive and stressful, but inhouse payroll processing provides a way for businesses to maintain control of their finances and avoid potential pitfalls associated with outsourcing to third-party payroll providers. By carefully considering your business's needs and circumstances, you can make an informed decision about whether inhouse payroll processing is the right choice for you.