"In warm weather, fewer people wear socks," says Paul Rotstein of Gold Medal International, a wholesaler in New York.
“在温暖的天气，穿袜子的人更少，”纽约批发商Gold Medal International的Paul Rotstein说到。
People may not sport socks in the summer but his firm starts shipping them to retailers in July, ahead of the start of the school year.
There is, however, a big lag before he is paid. He normally uses trade-credit insurance to protect against the risk that his invoices go unpaid,
but this year the insurers have slashed the amounts they are willing to cover by 50-90%.
That leaves him with two options: shoulder huge credit risk himself, or walk away from orders.
Mr Rotstein's dilemma underscores the role of trade finance, an unglamorous but critical bit of the financial system.
Many firms are owed a large amount by their customers in the form of receivables; in total the amount is worth around 20% of global GDP.
Some firms bear all the risk of nonpayment themselves. But others look to an insurer to protect them from default,
or take out specialist loans backed by the invoices.
Together these financing solutions underpin four-fifths of cross-border transactions, which are worth $15trn a year.
Trade financiers face three problems created by the covid-19 pandemic (and the accompanying recession).
It has disrupted normal operations by slowing the travel of documents; it has raised the risk that existing loans will sour;
and it has made lenders more cautious about making new loans.
Take operational troubles first. Trade finance is notoriously paper-based.
Processing credit requires involved parties, from financiers and carriers to warehouse managers and customs officers,
to exchange an average of 36 documents and 240 copies. But lockdowns trapped bits of paper in shut-down offices.
Printing became a palaver. When couriers eventually got to banks, they often found no one there.
Financiers have been forced to be nimble.
Banks started accepting scanned signatures and documents.
A cargo-firm executive says it issued four times as many electronic bills of lading—receipts detailing goods on-board a ship—in March as it did in February.
That has helped limit delays, though some in the industry worry that rises in fraud could follow.
A second concern is that the existing stock of credit turns sour. Trade finance has long been super-safe:
annual default rates on letters of credit averaged 0.11% of transactions in 2008-18, less than a tenth of those for corporate loans.
But insurers already report payment delays. A rise in bankruptcies would make matters worse.
Coface, a trade-credit insurer, expects these to rise by a third worldwide by 2021.