Last week didnâ€™t just bring us our fourth straight week of positive trends, but actually shows that most small retailers have recovered financially as well. While this is certainly very positive news, unfortunately small retailers arenâ€™t out of the woods yet. While they may have the funds necessary to pay existing bills, it is quite possible that many have done so thanks to loans they received via the second round of the Paycheck Protection Program (PPP). Unfortunately, they still are not placing new orders, which means that they arenâ€™t generating new sales. With millions of Americans still out of work, we will have to wait to see if many of the retailers who survived the pandemic will be able to survive the recession that follows it.
This week marks four straight weeks of positive growth, but not by much. Credit approval requests only increased by 1% over the previous week after last weeks improvement of 11%. The good news here is that even though it may not have increased by much, it is at least holding steady at just over half of normal levels and not dropping. On the other hand, total dollars requested increased by 20% and are now at nearly 75% of normal levels. Once again, the large disparity between these two measurement would suggest that major retailers are still doing the vast majority of the business while small businesses are still struggling.
Purchases seemed to be fluctuating wildly in both directions each and every week and have therefore been a little bit harder to gauge. However, last week marked the first time that we had positive growth in purchases with a 2% increase bringing us up to 60% of normal levels. With the large increase in dollars being requested for credit approval last week, hopefully we will see a larger increase in purchases next week.
Payables are presenting us the most positive news yet. Not only is this the fourth straight week of improvement, but we have seen improvements across all aging buckets for the very first time. Much of this can be attributed to total outstanding receivables dropping by nearly 15% last week despite having a relatively good week for purchases. Even more optimistic is the fact that we are now only several percentage points away from having an aging report that looks to be normal.
The percent of current receivables has grown by a little over 10% this past week, after improvements of 8%, 3%, and 2% over the last few weeks. Current receivables now account 55% of all receivables. While a normal level would be around 65%, this is a huge improvement over the low we reached of only 31% exactly one month ago. As for total dollars that are current, we saw a 7% improvement. This is a huge improvement as the previous three weeks only had improvements of 1%, 2%, and 1%. Now just a little over 70% of all dollars are current. Normal levels would be around 78% and our low point was 58% which occurred back in mid-April.
The most interesting data comes from receivables that have just became due. Invoices that are less than 30 days beyond terms dropped by 35% and now only account for 18% of all receivables while they would normally account for 27%. Total dollars that are less than 30 days beyond termed dropped an amazing 40% since last week. They now account for 12% of all outstanding dollars, while normally they would be around 15%. The reason for these slightly late receivables being better than normal may be because all of these orders would have been placed after stay-at-home orders went into effect. So, the businesses placing these orders were aware of the restrictions in place yet still had the confidence that they would be able to sell this merchandise and pay for it in a timely fashion. Another explanation for this is that major retailers tend to pay faster than small businesses, and major retailers have been doing a lot more business than smaller businesses since the start of the COVID-19 pandemic.
Now the really good news is coming from receivables that are more than thirty days beyond terms. While we had been seeing the numbers for newer receivables trending in the right direction for several weeks now, the numbers for these older receivables have been fluctuating up and down with the previous two weeks being the worst ones yet for these very past due receivables. Luckily this week, even these extremely past due receivables are starting to improve. It is also important to note, that at this point, all of these orders would have been placed prior to the first stay-at-home orders being issued.
The number of receivables that are 31-60 days old have dropped by 25%, although they still make up over 18% of all receivables, while normally they would only account for 3%. In terms of dollars, they fell by 22%. They still account for 10% of all outstanding dollars, while normally they would just be 1%. It is important to keep in mind that all of these orders were placed prior to stay-at-home orders, but would have been become due once stay-at-home orders were put in place. As a result the retailers that fall into this aging bucket didnâ€™t really have too much of an opportunity to sell the merchandise before being shut down.
For invoices that are more than 60 days beyond terms we also saw some pretty significant drops. About 8% of these invoices have been paid over the last week, but that accounted for 18% of total dollars owed. At this point, these are all invoices that became due prior to the first stay-at-home orders, meaning these businesses were all past due prior to the start of the COVID-19 pandemic. While these very past due invoices had remained fairly steady throughout most of the pandemic, they started growing quickly over the previous two weeks, that is because many of these invoices were still in the 31-60 day late bucket up until a week or two ago. While the number of very past due invoices is still very high, they only account for 8% of our total outstanding receivables when normally they would be about half that amount.
As we did last week, we will once again be comparing states that reopened early, prior to May 9th, to those that reopened afterwards. As we have mentioned before it appears that the decision to reopen has largely been driven by the local economy and not necessarily on the ability to contain the coronavirus and stop its spread.
The states that reopened early were indeed the hardest hit states economically. While these states normally account for 40% of our total volume, they now only account for about 14% of our total volume, which is still an improvement over 11% from last week, and 7% the week before that. Yet these states accounted for 23% of our total volume during the weeks that they were shutdown. However, this does not mean that reopening has hurt their local economies. In looking at their total volume, it has remained fairly consistent throughout the pandemic. However, the local economies that waited longer to reopen actually started picking up steam at the same time that Georgia became the first state to reopen. In other words, as weâ€™ve started to see slight increases in volume over the last few weeks, pretty much all of it has been coming from states that waited longer to reopen.
As far as payables are concerned, it did seem like businesses in states that reopened early had an easier time paying their bills. Last week we reported that businesses in states that reopened early were 6% less likely to be past due than businesses in states that reopened later. However, this week, which saw more older invoices get paid than any week prior during the pandemic, this gap in payables has narrowed to just 3%. This could either be due to PPP funds becoming available, or simply because at this point almost every retailer in the country has been allowed to reopen to some extent, whether it is at limited capacity or for curb-side pickup orders.
While business does seem to be improving for the most part, our economy is still mirroring our lifestyles, far from normal. DSA Factors will continue to provide weekly reports on the economy and how the COVID-19 pandemic is affecting retailers and small businesses.