There are many times in running a business where you do not have time to handle everything yourself. You may not be able to make necessary decisions or changes because of other pressing matters. This is usually where a letter of authority becomes useful. To help clear your understanding of a letter of authority, keep reading.
What Is a Letter of Authority?
A letter of authority is a legally binding document that allows a third person, known as an “agent,” to communicate directly with other businesses (like energy suppliers) on your or your company’s behalf. A correctly constructed letter of authority should include a signature, the date it was signed, and a description of the exact activities, the length of time that specifies how long the authority has been granted for, and obligations the third party has been authorized to handle on behalf of the ‘principal.’
How Does a Letter of Authority Work?
Once your letter authority has been accepted by all parties involved in the transaction process, i.e., you/ your company, the agent/intermediary, and the energy supplier (other business), the intermediary can begin working. Remember that even after a Letter of Agreement has been accepted and a third party has begun to work for you, you retain control.
A partnership of this type can be greatly beneficial to you if your Letter of Authority (LOA) is correctly prepared and tailored to protect you. You select a good third party that will stay completely honest during your time working together.
When Would You Need a Letter of Authority?
A letter of authority can be used by business in a variety of different incidents; some of these incidents are:
You may be experiencing problems with your supplier for any number of reasons. By providing your agent with a letter of authority, you allow them to forward your complaint to the supplier. They can discuss any issues with them and try to come to a solution on your behalf.
Those businesses need to submit forms regarding their energy use, like VAT forms and climate change levy exemption forms. You can authorize your agent to submit these forms for you or your business to ensure that your documentation is organized and up to date.
You can authorize your agent through the letter of authority to handle your contracts with your energy supplier. They can terminate, renew, or choose to switch suppliers on your behalf. They can compare contracts of different energy suppliers should they see the need to switch from your current supplier.
An agent can request an upgrade to your meter or a complete replacement should they see fit. They can ask for a smart meter to be installed on your premises if they feel this will benefit your business. They provided that you have given them this power through the letter of authority; they can make these changes for your benefit.
A letter of authority is an effective way to delegate your work to a third party who can make decisions on your behalf. A professionally written Letter of authority ensures that your needs are met to the best of your agent’s requirements. It also makes sure that you remain completely in control of the process.
Importance of a Letter of Authority
A letter of authority holds great importance and power and is an essential business legal document. Here is why:
1) Legitimates your words
A written legal document verifies your words. It acts as proof of what you said and legitimates your words. For example, if you are sick and want your friends who are also your colleagues to cover your work for a few days, you can write a letter of authorization. The letter will act as proof that you asked him to so that your colleague does not get in trouble with the boss. If anyone has any issues, your colleague can simply show them the letter of authority.
2) Keeps track of accountability
When you grant authority to someone to carry out a certain task on your behalf and accept the terms and conditions, they are accountable for the task. If something goes wrong, you can easily track down the person and hold them accountable for the mishap. For example, you asked your employee to pick up some very important documents and gave them a letter of authority which they signed.
On the way back, the employee loses the documents. In such a case, he will be held accountable and will have to pay for the consequences. But if there was no letter of authority, you would be held accountable.
3) It is a legal document
A letter of authority is a legal document that both parties sign. This makes both parties legally bound to the document. If any legal issue arises, the letter will be used in court as proof.
4) All terms and conditions are mentioned
The letter of authority contains all the details. It contains the person’s name from the parties, the date, and the duties that you are granting to the other and asking them to perform. The document then can be referred to in the future if any legal issue arises.