How Remote says it funded its clients’ payroll after the Silicon Valley Bank collapse

The collapse of Silicon Valley Bank has reverberated far beyond the tech world, spooking investors and triggering flashbacks to the financial crisis of 2008. The downfall of the country’s 16th-biggest bank—which provided financial services for many tech startups and VC funds—isn’t only a problem for people banking with SVB directly amid an historic bank run. The FDIC has stepped in as receiver for the bank, but in the immediate wake of the collapse, many companies were left in the predicament of struggling to make payroll on time.

Some payroll providers, including Gusto and Rippling, announced that they had intervened to help clients, using their own capital to fulfill payroll for companies that banked with SVB and were unable to access funds to pay employees before regulators stepped in. While there was no formal announcement, Remote co-founder and CEO Job van der Voort told HR Brew that his company, a provider of international compliance and payroll management software tools, assured clients their workforces would be paid, even though its traditional way of handling payroll for SVB clients went kaput overnight.

“We process payroll for thousands of companies,” he explained to us. “They actually wire us money to pay their employees, and then we pay out those employees.”

With SVB unable to process the wires when companies were supposed to be issuing paychecks, Remote fulfilled payroll out of its own pocket, van der Voort said. “We had enough cash in the bank to be able to fund payroll for all those customers. So, we decided to do that,” van der Voort told HR Brew.

A shocking scale. Hiccups can happen with payroll, but not usually like this.

“It happens that a customer can’t access their funds for some reason. But that’s one [company],”  van der Voort said. With SVB it was a much bigger crisis and it was critical for Remote to assure frazzled clients swept up in a historic financial meltdown that they’d be ok.

The company sent emails “to all those customers that we knew banked with SVB. We didn’t know their status. And then we started getting replies,” he explained. Leaders had ample reason to fret: Failing to make payroll on time can carry legal risks. “Not paying payroll is probably the No. 1 concern of every one of these [companies],” van der Voort said.

Ultimately, the company helped to get “multiple thousands” of employees paid, according to an emailed statement from Remote spokesperson Jaymi Morris, who declined to give specifics on how much Remote spent covering payroll for clients’ employees. Seamus McAteer, CEO of text-to-speech AI platform Speechlab, uses Remote to pay two employees who are based in Brazil. He told HR Brew the company sent him emails extending assurances that payroll would be met. “The first one was a little unclear as to what their strategy would be. Then the second email basically said, ‘Listen, we’re going to cover payroll for this month, don’t worry about it, we have the resources to do that.’ I was like, ‘One less thing for me to worry about.’”

The feeling was echoed by Evan Shiue , co-founder and CFO/COO of client company Ownit, who shared on Linkedin a screenshot of the email Ownit received from Remote assuring that its staff would be paid.

“Essentially what we said is, ‘Regardless of what our agreement is, you can pay it whenever you have access to funds,’” van der Voort said. “We do expect you to pay us in time, because it’s a lot, and it is paying your own people.”

Gusto, for its part, has received reimbursement for the payroll expense from many of its clients, spokesperson Kelly Boynton confirmed over email. Rippling, which banked with SVB, covered payroll for 50,000 client employees on Friday, March 10, after switching its funds to JP Morgan Chase, it detailed in a blog post by CEO Parker Conrad. However, the pay run was delayed, Rippling CEO Parker Conrad explained in a Twitter thread.

Each of these companies emphasized their diversified banking allowed them to throw clients a lifeline. “We have like 200 bank accounts,” van der Voort said, and among them was one SVB account.—SB