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Power of Attorney

A power of attorney is a legal document that gives someone power of attorney to act on behalf of the company. Typically, the power of attorney document carefully details the transactions and processes for which the person is being authorized, rather than giving a general mandate that the agent would be completely free to act on.

A power of attorney gives legal authority to a person acting as a proxy. For a business, that authority may include the ability to access financial accounts, sell stocks or place new orders, and write checks, although the agent can also perform a variety of other activities to keep the business going. For security reasons, a POA document should strictly restrict the agent's activities or access to certain accounts.

Powers of attorney can be used effectively in the ordinary course of business or only under certain conditions - for example if the business owner is unable to make a decision or is unable to access the business accounts.

Advantages and disadvantages of POA authorization The main benefit of having a power of attorney on a commercial bank account is that you have the security of a backup plan in case the business owner or other agent is unable to perform their duties. Authorizing an agent to act on their behalf prepares the company for any unexpected situation and enables them to make important business decisions in a timely manner. If the owner of the company has not given anyone legal permission, there is always the risk that he or she will at some point be unable to make important business decisions or conduct essential transactions, which can cause enormous damage to the company and its reputation. The lack of a designated agent can result in salaries not being paid on time, business loans or mortgages not servicing, third party service providers not being paid, and potential contracts being lost.

The advantage of authorizing the account holder goes hand in hand with the certainty of being able to entrust the authorized agent with access to your business account. So it is highly recommended that you think carefully before granting someone a POA and giving them access to a bank account and the opportunity to make important business decisions. The person you appoint as a representative has unattended access to the company's funds, which could potentially increase security risks if the appointed person acts in interests other than those of the company.

Security Risks & Liability Generally, an agent is expected to make decisions in the best interests of the account holder, even if those decisions are not those that the agent would make in person. It is therefore important to discuss all aspects and obligations of the POA with this person.

To reduce the potential security risks, you need to know who you can trust with access to the business account and ultimately the business itself. The agent will most likely run your business at a time when you are unable to closely follow his or her decisions. Finally, a power of attorney given to the wrong person can result in misuse of the company's money or access to credit, for example if that person is investing poorly, running into debts on your behalf, or failing to pay bills on time.

http://www.confiduss.com/en/banks/account-management/authorization/