What does trade credit insurance protect businesses from?

• A. The failure of suppliers to deliver goods
• B. Regulatory changes affecting trade
• C. Risks of customers not paying for goods or services purchased on credit
• D. Losses due to currency fluctuations

Answer: (C)

Trade credit insurance is specifically designed to protect businesses from the risk of customers being unable or unwilling to pay for goods or services that have been purchased on credit. This type of insurance mitigates the financial impact that could result from bad debts when a business extends credit to customers, ensuring that companies can maintain their cash flow and overall financial stability. By covering these unpaid invoices, trade credit insurance helps businesses feel more secure in their trading relationships and encourages them to offer credit terms to customers, which can enhance their competitive position in the market.

In contrast, the other options represent different types of risks that trade credit insurance does not cover. For example, while the failure of suppliers to deliver goods is a supply chain risk, it falls outside the scope of trade credit insurance's focus. Similarly, regulatory changes and losses due to currency fluctuations are addressed through other risk management strategies and financial instruments, but they are not the primary concern of trade credit insurance.