Credit insurers are refusing to offer new cover to companies carrying out trade with Greece because of uncertainty over the solvency of Greek customers hit by capital controls, a Greek importer told Reuters.

Trade credit insurers are essential to the smooth flow of products and services between countries, since they protect exporters from the risk of buyers defaulting, becoming insolvent or going bankrupt.

But Greek companies and individuals are subject to severe constraints on moving funds after talks with the country’s creditors foundered, making it far more risky to provide insurance that covers Greek importers.

“The credit companies we work with, for example Atradius, (are) eliminating our coverage towards suppliers that we had,” said the head of one of Greece’s largest wholesale clothing importers, adding that suppliers would now need cash – at a time of constrained liquidity.

The slow-down in credit was coming just as suppliers had started responding to signs of an economic upswing by providing credit to Greek importers again for the first since Greece’s debt crisis began in 2009, he said.

He added that while his insurance supplier was not canceling existing cover, it was waiting until after Sunday’s Greek referendum to decide whether to offer new cover.

Without discussing specific cases, Amsterdam-based Atradius , said it was concerned that the referendum on whether to accept bail-out conditions from Greece’s creditors could drive the country into a still deeper recession.

“Any valid claims, we continue to cover,” said John Blackwell, a company spokesman. “We’ll have to wait to see what the outcome (of the referendum) is, and how we’ll respond.”

A spokeswoman for Paris-based Euler Hermes, the world’s largest trade credit insurer, said Greece’s financial controls effectively made it impossible for Greek importers to pay foreign suppliers.

In a research note, Euler Hermes warned that the impact of capital controls was likely to be long-lasting. “It took Cyprus two years and Iceland seven years to revoke controls,” the company’s analysts wrote.

They added that particularly vulnerable sectors included machinery and equipment, oil and refined petroleum, computer and IT services and vehicles.

Both companies said their exposure to Greece was very limited, with Euler Hermes saying German exports to Greece had already fallen sharply and that the country was the destination for just 0.44 percent of all German exports.

(Reporting by Thomas Escritt, Jonathan Gould and Tom Pfeiffer; Editing by Mark Trevelyan)