Once again we are continuing to see strong numbers from our data, although the numbers seem to be remaining stable now. This is still very good news as the economy has recovered immensely over the past few weeks and is approaching normal levels. However, with outbreaks spreading across the South and West, we are starting to see the economy slip in these regions. It will be interesting to see what the economy does over the next few weeks, especially if businesses may be forced to close their doors once again.
The number of credit approval requests we received this week hasn’t really changed much from the past two weeks, and are at a very acceptable 78% of normal levels, following 76% the week before and 81% the week before that. The big change was that total dollars jumped considerably to almost 150% of normal levels. While this may sound like fantastic news, it is entirely due to a single extremely large purchase order that we received. If we remove that one purchase order, total dollars for the week would be at 89% of normal levels, which also falls right in the middle of the numbers from the previous two weeks. This huge difference demonstrates just how much of an impact major retailers can have on the total dollars, but the relatively large number of approval requests does indeed that many small businesses are once again ordering.
Purchases jumped this week to 122% of normal levels, however, this is mainly due to the fact that we purchased about three quarters of that very large purchase order we received this week. If we exclude this one very large purchase, purchases were only at 68% of normal levels. While that number is significantly lower than the 76% and 88% numbers we saw the previous two weeks, it is still much improved over what we saw at the height of the lockdowns. These numbers also seem to fluctuate wildly so a low number for one week isn’t really a cause for concern.
Once again payables look to be headed in the right direction and are growing significantly. Our total dollars outstanding the week are up nearly 16%. Now of course that includes the one very large PO, but even we exclude that, total outstanding is still up 3%, marking the 4th straight week of positive growth. Also growing are the total number of outstanding receivables which are up 7%, and the total number of accounts with a balance which is up 9%. Of course, all of this occurred as many older invoices continued to get paid off.
The number of invoices that are current grew by nearly 14% this week. Current invoices now account for 72.5% of all outstanding invoices, when normally they would only account for around 66% of all outstanding invoices. Current dollars grew by 25% this week, and if we were to eliminate that one large order they still would have grown by 8.5%. Current invoices now account for 85% of total outstanding dollars, way above the normal level of 77%. Most likely these unusually high percentage are due to the economy picking up after being quiet for so long. It will be interesting to see if these numbers are able to hold steady over the next 30 days.
The number of invoices in the 1-30 days late bucket actually grew slightly this week, however, they make up a slightly smaller percent of all outstanding invoices, still accounting for about 17.5% of all outstanding invoices. Meanwhile the total dollars in the 1-30 days late bucket dropped by 25% this week, and they now account for less than 7% of total outstanding dollars. Last week these invoices accounted for 10% of total outstanding dollars, and normally they would account for approximately 15% of total outstanding dollars. This huge decrease is due to invoices being paid for in a very timely manner, they are not aging out of this bucket.
This leads us to the 31-60 days beyond terms bucket. Once again, we saw a drastic decrease in this bucket. We saw 37% of these invoices which accounted for 59% of all dollars in this bucket get paid for in the last week. These invoices now account for only 2.7% of all outstanding invoices, which is down from a high of 23% from 6 weeks ago. 2.7% would actually be on the low side of what would be considered normal for this bucket. These invoices also account for less than 1% of total dollars outstanding, down from a high of 12% also from 6 weeks ago. Once again, this number would be on the low side of what is considered normal. All of these invoices would have been created after the initial stay-at-home orders went into effect, although it is possible that some of the orders would have predated the pandemic.
The more worrisome numbers are coming from invoices that are more than 61 days beyond terms. These numbers haven’t really changed any from last week, although a quarter of the invoices that were 61-90 days beyond terms last week, have now aged into the 91 days or more beyond terms bucket. These invoices still account for about 7.5% of all invoices and all dollars outstanding, while normally they would only be 3-4%. Of course, that 7.5% is a little inflated as we are only at approximately 78% of normal total volume. A large percentage of these invoices are coming from clothing stores, hotels, and restaurants, industries that were particularly hard hit by the stay-at-home orders.
Since we started doing state-by-state analysis of our data we have been sounding a lot like a scratched record, the states that opened prior to May 9th are fairing much worse than the states that waited later to reopen. Now as COVID-19 cases are surging across the country, we are actually seeing the economies of states that opened early start to slow down again, while those that waited longer continue to pick up steam. Furthermore, businesses in states that reopened early are still twice as likely to be past due than those in states that waited longer to reopen. However, our new discovery this week comes from comparing states that have managed to control the pandemic to those that are seeing a surge in cases.
As we mentioned, states that reopened earlier accounted for 40% of our volume prior to the pandemic, and slipped down to 21% of our volume at the height of sty-at-home orders. After reopening they started to gradually improve and last week we reported that their share of total volume increased by 3% since April 24th and 6% since May 9th. However, as many of these states have been hit by a surge in cases, those gains have all been pretty much wiped out. In just one week they lost all the gains they made since April 24th, and have now only gained 2% since May 9th. The reason behind this is that their total volume simply isn’t growing as quickly as total volume in states that waited longer to reopen. Since May 9th, states that reopened early are now at 49% of normal volumes, up from 25% prior to that. Meanwhile, states that reopened later are now at 104% of normal volumes since May 9th, up from 60% prior to that. Overall, the country is at 84% of normal levels, up from 47% prior to May 9th.
This week, given the huge surge in COVID-19 cases, we decided to compare states that are surging to those that are either improving or staying the same. It probably won’t come as a surprise that the states that are not seeing a surge in cases are doing much better economically. The states that are surging are currently doing 63% of their normal volume, up from 49% during the height of stay-at-home orders, while the states that are improving or staying steady are doing 122% of their normal volume, up from 44% during the height of stay-at-home orders. Of course, these numbers are both much higher than the numbers above, but that is due to the fact that many of the larger states, including California, Texas, and Florida, are states that are surging. Combining these numbers you still wind up at the same 84% for the country.
Since we can see such a large difference between states that are surging and states that aren’t, it probably would make sense to see if there was a similar trend at the start of the pandemic. To do this, we will compare states that issued stay at home orders prior to March 28th, to those that waited longer or never issued stay-at-home orders. Interestingly, both of these groups accounted for 50% of our volume prior to the pandemic. During stay-at-home orders, the states that were quicker to enact orders saw their volume reduced to 74% of normal levels during the stay-at-home orders, but that volume has since recovered to 96% of normal levels as stay-at-home orders began to get lifted. However, in states that waited to enact orders, their volume dropped down to 22% of normal levels immediately after California issued the first stay-at-home orders. As stay-at-home orders began to get lifted, these states saw their volume improve to 72% of normal levels.
What’s interesting is that states that reopened earlier clearly did so because their local economies were completely destroyed by the pandemic. However, when we compare the states that are surging to the ones that aren’t, we can see that their economies were pretty much the same during stay-at-home orders. Whether or not a state chose to reopen early or not does not correlate with whether there is a surge in the state. While Texas, Florida, and Georgia all reopened early and are experiencing surges, California waited to reopen but are still experiencing a surge. Furthermore, Indiana, Colorado, and Maine reopened early, yet the number of cases in those states is either staying steady or declining. We also saw that the states that acted sooner in issuing stay-at-home orders also fared much better during the lockdown, and have continued to do better since. From the data above we can see that consumers are definitely concerned about their health, and are more willing to spend money if they live in a state that is taking greater precautions to minimize the spread of disease. As states continue to open up more and more, if that reopening up leads to a surge in cases, then there is very little to be gained economically from the reopening. However, if the reopening is done responsibly, the economy can thrive even if many restrictions are still in place.
Certainly, there is a lot of information that can be learned from the data, and as the situation in both the country and each state changes, we are seeing some very interesting things happen. Here at DSA Factors we will continue monitoring and reporting on our data for as long as we need to. Let’s hope that we won’t need to do so for too much longer.