What is a Letter of Authority or LoA?
If you’ve enquired about changing energy providers for your business, you’ve almost certainly come across the term letter of authority (or LoA). Here, we delve into everything you need to know about an LoA and why it’s the key to saving you money on your energy bills. If you would like to read more information or learn more about the pricing of business energy, you can do so here .
What is a letter of authority?
An LoA is an agreement you sign that authorises a third party to contact energy suppliers and negotiate new energy contracts for your business. Most business owners don’t have enough time in their schedule to conduct these negotiations and comparisons themselves. Therefore, it’s usually a good idea to hire a third party to complete this process on your behalf.
Why do you need a letter of authority?
The consultant you hire on your behalf to negotiate better contracts with energy suppliers for your business is not legally authorised to do so until they have written authorisation from you. That written authorisation comes in the form of a letter of authority.
These third parties are often energy brokers or consultants. It’s essential to hire a reputable professional to handle these negotiations for you. A lousy broker won’t go the extra mile to save your money on your energy bills and will quite happily pocket any commission they can get.
What access does an LoA give?
We’ve mentioned that a letter of authority enables a third party to negotiate on your behalf, but what information exactly do they get access to? Firstly, they gain access to your business’ energy consumption history. They also gain authorisation to oversee communication between you and your supplier and arrange maintenance and update works (such as boiler services).
These third parties will also be in charge of handling complaints on your behalf if the supplier does not meet requirements.
What do energy consultants do?
The third party hired by you will conduct various tasks on your behalf to save you time and money. These include, but are not limited to:
Invoicing suppliers
Gathering consumption data and energy meter information
Schedule site visits
Negotiate prices for your energy contract
Renew or opt-out of your energy contract
Switch contracts
Submit complaints to suppliers on your behalf
How do you write a letter of authority?
There are two ways to go about writing an LoA. The first is to do it yourself. Various online templates will speed up the process for you, but note that this option can be time-consuming.
The other option is to use the template put together by the third party you are hiring. With this option, you must read all the information put into the LoA by the company to ensure that you are happy with the amount of access they gain and the contract details.
Note that to be valid, the letter of authority has to be signed by the business owner, a director or other authorised signatory.
How long does a letter of authority stay valid?
Typically the agreement is valid for 12 months. After that, you’ll need to sign another LoA to allow your broker or agent to continue negotiating and handling energy services for you. That length of the period tends to be the industry standard. Therefore, if the contract is for a shorter or longer period, it will clearly state so in the LoA.
Do you need a letter of authority?
Suppose you’re looking to save on your energy bills and don’t have the time to conduct price comparisons or negotiate with energy suppliers. In that case, it’s a good idea to allocate this to a professional.
These energy consultants have the necessary knowledge to find you better deals and, in the process, will save you time on handling the large volume of admin that comes with switching or finding better energy rates. To do this, you will need to draw up an LoA, either by yourself or through a company providing that service.
Is a letter of authority safe?
An LoA is a legal document that gives a third party access to business information. Therefore, you should always read all the information regarding the agreement to ensure that you are happy and comfortable with submitting the letter of authority.
What happens after you submit?
Typically the third party company will take a few days to process your request. Once approved, you’ll be allocated a consultant that will begin the process of saving your business money on energy bills.
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Hi, I’m Ally Cox, one of the leading Copywriter/Bloggers at CompareYourBusinessCosts.co.uk, a platform renowned for its in-depth analysis and comprehensive comparisons of business services. With over a decade of experience in the industry, I bring a wealth of expertise in areas such as leased lines, VoIP, business energy and office solutions, HR solutions, accounting, and payroll services, among others.
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