Silicon Valley Bank collapse affects Patriot Software in Stark County
The swift collapse of Silicon Valley Bank on Friday has sent shockwaves to Stark County.
Patriot Software, a Jackson Township company that provides accounting and payroll software for millions of American businesses and their accountants, uses Silicon Valley Bank as its bank to hold the funds for the direct deposits it processes for customers, according to its website.
According to national news reports, federal regulators closed Silicon Valley Bank, the nation’s 16th largest bank, just before noon Friday and took control of its deposits. The collapse is considered the largest U.S. bank failure since the global financial crisis more than a decade ago.
Patriot Software began fielding complaints around 9 a.m. Friday from customers whose employees hadn't been paid through direct deposit. At that time, Patriot said its bank "has experienced a processing delay," which meant customers may experience a delay with direct deposit. At 11 a.m., Patriot said in a message to a customer that it still expected the issue to be resolved by the end of the day.
At 1:30 p.m., the company issued guidance for its customers on its website.
Calling it an “unprecedented event,” the guidance said employee funds for the March 10 pay date would not be deposited Friday and the company could not verify that the March 10 payroll would be deposited into employee bank accounts. It said that each Patriot customer would be FDIC-insured up to $250,000.
Patriot added that it is working with other banks to ensure that its customers can continue with their direct deposits as normal, but it advised customers to avoid using direct deposit for payrolls until more information is known.
Patriot Software responds to Silicon Valley Bank collapse
In a news release Friday, Patriot Software CEO Mike Kappel called on the officers of Silicon Valley Bank and senior players within the FDIC to work together quickly to ensure that every payroll company that relied on the bank can get their customers' employees paid without further delay.
“It's not OK," Kappel wrote about the situation.
Emily Potts is among the people who didn’t get paid Friday due to Patriot Software’s inability to make direct deposits.
"I'm one of the people that was not paid and I am beyond frustrated," said Potts, a nanny in Evansville, Indiana. "I have bills to pay and this is unacceptable."
Potts, who said she will be unable to pay her bills if she doesn't get paid before Monday, said she doesn’t blame Patriot Software because she realizes it’s out of the company’s hands.
Patriot Software has pledged to post updates on its website as additional information becomes available.
Reach Kelli at 330-580-8339 or kelli.weir@cantonrep.com.
On Twitter: @kweirREP
This article originally appeared on The Repository: Silicon Valley Bank closure upends Jackson Township's Patriot Software
