Fall Update
As this newsletter was being written it was snowing in Iowa, which makes talking about the fall updates seem like it should be the winter updates. But never fear, there is still plenty of 2020 left before Ol' Man Winter settles in. In this newsletter, you'll find thoughts about what the economy might look like in the short-term. Plus, we've highlighted education and other important information.
Now What? Prospects for 2021
By Chris Kuehl
Managing Director, Armada Corporate Intelligence

There is not much about 2020 that has followed any kind of traditional script. The arrival of the pandemic and the subsequent economic lockdown plunged the country into a very unique recession that has defied all the traditional remedies. It has also upset the usual rhythm of an election year. What makes this one unique is that the most important issue will be the same after the election as was the case before. The White House, Congress and every other government jurisdiction will be faced with the pandemic and the lockdowns that will still be in place. 

In many respects the economy has performed better than expected towards the end of 2020. The expectation had been that recovery would be underway by May but that didn’t pan out. The assumption was that the economy would decline through the summer but that was not the case either. There has been some significant bounceback in the third quarter but not in all areas. The retail community saw better than expected growth and so did much of manufacturing. Construction was driven by demand for warehouses and distribution facilities but demand for office buildings crashed. Medical sector activity has been up but anything connected to the hospitality or entertainment sector suffered along with travel and tourism. The service sector as a whole was down.

Key Assumptions for Future Growth and Recovery
The 2021 expectations are similarly all over the place but there appear to be three key assumptions as far as future growth and recovery. The first and most important is the pace of the pandemic. There will be no real economic rebound for the bulk of the service sector until the lockdowns can be lifted. The efforts to isolate and quarantine have been spotty and somewhat ineffective and that has placed the burden of control on vaccine development. At this point there is not even a vaccine available, but it is anticipated to be ready by early in 2021 and then there will be a race to distribute. The faster that happens the sooner the real rebound.

The second assumption is tied to the first. How soon will consumers be willing to resume old patterns. They have shown a willingness to consume again as retail numbers have been acceptable, but the service sector is another matter. Prior to the lockdown the consumer spent about 65% of their disposable income on services and entertainment. These are the sectors most affected by the shutdown. Will they come back? Will consumers feel confident enough to start attending events again? Will consumers substitute goods purchasing at the expense of those service expenditures?

The third assumption revolves around the patterns that have already changed. Will these new patterns emerge as dominant or will business and the consumer go back to old ways? The population has shifted dramatically to the work-at-home model but the enthusiasm for the shift varies. Many are content to keep working this way and others are demanding a return to the workplace. The shift from brick and mortar retail was already taking place but the lockdown accelerated that transition. At the start of the year around 10% of retail sales were online and by the end of June that percentage was up to 18%. Will that keep increasing? The global supply chain altered as companies sought to diversify their suppliers and there was a great deal less faith in the Just-In-Time system. Warehousing and inventory are popular again but how long does that last?

The Bottom Line
The bottom line is that 2021 will be an improvement over 2020 (it almost couldn’t help but be). How much better will depend on managing the changes that have taken place. 

Chris Kuehl, PhD is the NACM Economic Advisor and Managing Director of Armada Corporate Intelligence. In addition to providing the Credit Manager's Index, Chris often contributes articles to NACM National and NACM Heartland.
Ask the Board
With a large number of people still working remotely, are you having problems finding the right person to discuss questions about a customer’s credit issues or delinquent accounts? If so, how have you resolved this? Or, how did you keep your contact information current? 

Steve Stahl
Great Western Bank

Remote access is a huge issue for me. I have always been a paper-based person; and my company does not allow me to print at home. Thus, I had to change my ways in tracking of past due loans. I created a spreadsheet to track what would be 30 days past due by end of month. I now send this out to the group presidents, and we discuss weekly on our calls.

As far as credit issues, the credit department has slower turn time on decisions, based on connectivity and slow computers being the issue. Additionally, we cannot discuss in our “bullpen” when we have an interesting situation. The learning curve is being slowed for the less experienced staff members.

Ty Knox, ICCE

We have found quite the opposite in that customers seem to be more responsive working remotely. Many are relying on email as well as Microsoft Teams or Zoom to communicate, and we have found response times improve over traditional phone correspondences. The biggest factor seems to be that with no commute, many remote workers are working earlier in the morning and later in the day than standard business hours (8 a.m. – 5 p.m.). This has resulted in getting requests and inquiries handled faster than before. 
Annual NACM Heartland Roundtable
Virtual Meeting Platforms
During the past several months, conducting meetings online has become the new normal. Solutions such as Microsoft Teams and Zoom were downloaded so we could quickly connect with our internal teams, clients, as well as family and friends. This virtual interaction was a much needed connection as we were mostly housebound.

Now, when we all thought we'd be through the worst of it, Zoom and Teams are still tools in our collective toolbox. It's funny though, while some people jump between the two virtual meeting solutions, just as many people are strongly Team Zoom or Team Teams. It makes sense. Initially, Zoom had a few security issues that were quickly resolved with programming patches and users realizing they couldn't post a meeting link in a public place like social media. But Zoom is economical and simple to use. Teams, on the other hand, comes from a long-respected developer, and is a robust solution. Some complained there were connectivity issues, but this is an easy to use solution, as well.

So where does NACM Heartland land with it all? We like to be flexible. We have found great success using Zoom for our larger roundtables and meetings. For our smaller groups, especially some of the credit groups, we've used Teams. There are tiny differences between Zoom and Teams that have led us to use them the way we do. At this point, we'll continue to use both solutions while monitoring updates to make sure we are using the right solution at the right time. If your organization doesn't allow you to use one of these programs, we ask you let us know so we can adjust if necessary.

With all of this said, we miss meeting in person.

There is great benefit to being in a room with your peers. Whether it is our credit exchange groups or a learning opportunity, the exchange of ideas is just different when you are face-to-face. Maybe it's the chatting that happens during breaks as well as before and after a presentation. Maybe it's just nice to leave the office. Whatever the reason, we cannot wait until the day we don't have to think about COVID numbers and how it impacts our meetings. Until then we'll be Team Zoom and Team Teams.
New Members

Osage Co-Op Elevator
Ag Co-op Services, Inc.
Albert Lea Seed

10-30 Securing Mechanic's Lien Rights in Notice of Commencement States

11-3 Advanced Look at the UCC Process
11-5 The Sales & Credit Relationship
11-5 Credit Insurance Best Practices
11-9 Certification Exam
11-10 An Advanced Look at the Lien and Bond Claim
11-12 Project Management for Credit Professionals
11-13 Heartland National Ag Retail - Great Lakes Regional Meeting
11-16 Heartland Steel Meeting
11-19 Heartland Construction Meeting
11-20 Heartland Roundtable Discussion 

12-10 Heartland Board of Directors Meeting

1-1 HAPPY 2021!
1-4 Accounting Online Course
1-11 International Credit & Risk Management Online Course 
1-15 Application Deadline for the March 8 Certification Test