What Silicon Valley Bank Teaches Us About the Need for AP Automation

The March 2023 Silicon Valley Bank (SVB) collapse was a traumatic experience for hundreds of business owners. Fortunately, federal regulators took action and backed all SVB deposits, allowing bank customers to make payroll and to pay vendors.

It was a painful event to watch, and the collapse is a cautionary tale for businesses and how they operate. Now is a great time to evaluate how you use your bank to manage cash, pay vendors, and to perform other services, including accounts payable (AP) automation.

As you’ll read below, SVB customers who used the bank for more than simply cash accounts faced more problems and were exposed to far more business risk. It may be time to use a third party, such as Stampli, for your AP automation needs, rather than a bank.

In case you’re not familiar with Stampli, you should know that it’s a complete AP Automation platform that brings together AP communications, documentation, and payments in one place. Using Stampli provides full control and visibility over corporate spending.

Ok, put yourself in the shoes of an SVB customer during the collapse. Your first concern is cash management. 

Manage Cash More Effectively

If you read reports that your bank is in trouble, you need to quickly determine your cash, accounts receivable, and accounts payable balances. Companies that use manual processes can’t determine these balances quickly, and owners may make decisions based on incomplete information.

Assume that, on average, your business carries a $300,000 balance at SVB Bank. Here are some questions to be answered.

What is the current cash balance?

You need to know the cash balance to assess the risk of holding funds at SVB Bank. To reconcile the cash account, your accounting team needs an accurate listing of outstanding checks and any other payments in process.

When you pay using ACH and credit cards from the same provider, such as using both Stampli Direct Pay for ACH, or using Stampli Card, you have far fewer outstanding checks, and you can reconcile the cash account much faster. Determining the reconciled cash balance quickly leads to faster decision making. Based on the current balance, you might decide to leave a portion of your cash on deposit, or move the entire balance to another bank.

Segregating other assets

If you have other assets, such as certificates of deposit or investment accounts, move the assets to a separate financial institution. Don’t keep cash and other assets in the same bank. 

Here’s why.

The LA Times quotes this SVB customer: “Another customer said he had decided to withdraw a $200,000 certificate of deposit to get down to the FDIC-insured limit of $250,000. He said he was worried about the bank failing and had decided to pay a $4,000 penalty to withdraw the CD early.”

Many banks market cash accounts, mortgages, investments, and insurance to customers. As SmartAsset explains: “This one-stop approach enables customers to handle all of their money needs under one roof. And it helps the bank to protect their clients from leaving for another financial institution.”

If your bank faces a financial crisis, more products and services means more risk to the business. Don’t concentrate all your financial activities in a single bank.

Can I reliably process vendor payments?

How much do you owe vendors, and how easily can you monitor vendor payments?

Modern AP automation platforms, including Stampli, put all of your invoices, purchase orders, and shipping receipt data in one place, along with all communications between the stakeholders. Users can quickly determine the dollar amount of invoices outstanding.

Your vendors can see a list of outstanding invoices and each invoice’s status in the Vendor Portal. In addition, vendors can ask questions regarding payment using the portal. With Stampli, you can monitor invoice payments, and vendors can communicate any payment delays to you electronically. If your bank is not paying invoices as instructed, you can follow up quickly.

There’s one more issue related to vendor payments: using a business credit card that is issued by your bank. Here’s a quote from an SVB customer who began receiving payment failure notices on the company’s SVB credit cards and began paying the bills with her personal cards. 

“I run a software company, we are in the consumer social space, we have a tech app and audio app,” she said. “I can’t have my backend database go out because it wasn’t paid.”

Work with an AP automation platform that is payment agnostic, so you control how you pay vendors. Stampli customers retain full control over payments, and clients decide when and how invoices are paid.

Consider Moving Processing Out of Your Bank

In addition to financial products, banks may offer customers other services, including AP processing (here’s an example). Business owners should consider using a third party for services that are currently performed by the bank.  

If your bank has a financial crisis, can they reliably perform the services that you require? Will a bank’s financial crisis prevent them from processing AP accurately, and in a timely manner? Reduce the potential risk by moving to a third-party provider like Stampli.

Work With AP Processing Experts

Get started with AP Automation in days — not months — as the Customer Success team guides you through a fast and easy setup process. Stampli experts work with many ERP integrations, and Stampli offers the fastest setup in the industry with unlimited, ongoing support in the form of an on-demand AP professional. Their experts support your business from implementation, to onboarding and training.

The results speak for themselves.

Stampli is rated #1 in Customer Satisfaction in the AP Automation category on G2’s Winter 2023 report. Managing your business is challenging, and you need reliable partners to manage your operation. Automate your AP process with confidence using Stampli.