Since business energy can be quite confusing, the Third Party Intermediaries or TPIs are individuals or organizations that provide energy-related advice. With their guidance, businesses can get the necessary information to manage or buy their energy needs. TPIs can range from online switching sites to individual brokers, and they provide support with energy procurement.
Compared to getting home energy quotations, getting business energy quotations tends to vary, and people can get support from TPIs. Several reasons make the processes change, and some of them are:
- They have more extended contracts than the residential properties, and as such, businesses must carefully examine the quotes before they agree to it
- After agreeing to the contract, companies cannot have a cooling-off period, even when the agreement is via the telephone and not in writing
Several switching sites and brokers work with a wide variety of TPIs. As such, these switching sites connect with TPIs ensure that companies have all the information they need by reaching a range of customers. It is essential to be happy, confident, and understand all the information when working with a TPI. Individuals or businesses can do this by asking:
- If the charge on the services will be directly or indirectly and how they will be charged
- The type of services they will offer during the contract life
- How they will help in switching to a supplier
- The kind of supplier s they will be approaching
- The number of price offers they will give to the person
There are one or two ways to pay TPIs. A charge one a trade someone else made on behalf of another or a flat fee are some of the direct charges paid to the TPI. When the TPI gets payments from the supplier on a company’s bill, they will charge indirectly.
Managing the Extended Business with TPIs
Leveraging the business partnerships of the TPIs in the developing inclusive marketplace can help businesses find innovative means of bringing products to the marketplace, decreased service delivery expenses, and reduced time to market. Several businesses align with TPIs for human resources, permitting/licensing, research/marketing, distribution, sales, logistics, and more.
TPIs Benefits and Challenges
Developing Third-Party Intermediaries relationships can be critical to furthering a business’s growth strategies and vision, increasing efficiencies, and boosting sales. Some risks that come with such relationships, including:
- Strategic: a business’s strategic objectives misalignment
- Cyber: third-party’s over-reliance and poor data security
- Operational: little control over service and processes levels
- Reputational: decreased brand perception
- Business continuity: service interruption
- Financial: possible increase costs and revenue leakage
- Compliance: possible violation of international or US law
Some entities that engage with TPIs, fourth parties that make the extended enterprise network quite more complicated. These parties can potentially exhibit dangers to a business.
From the current data, with the concern of the third-party relationships, global regulators have firm rules for sanctions, penalties, and large fines. TPIs’ involvement in all US Foreign Corrupt Practices Act with up to 100 percent in 2014 by the Justice Department and Security and Exchange Commission. There were more than $1.5 billion from FCPA enforcement movements over corporate penalties by the Shearman and Sterling LLP report. With history’s highest average of $157 million in the average corporate liability.
When there is a strong agreement program in place, businesses believe that it can present in mitigating, managing, and identifying possible risks using extended enterprises. In a survey carried out by Deloitte Consulting LLP, 22 percent of participants indicated above average with their business’s compliance function and extended enterprise hazard management. Also discovered in the study was about 72 percent of companies with no adequate processes and tools to control Third-Party Intermediaries.
Options and Risks for Extended Enterprise
There is a need for a business to have a clear grasp of the underlying risks, especially in the emerging market, when they want to establish or maintain an effective relationship with TPIs all over the world.
Some of the factors companies must consider and address in possible TPI arrangements all over the extended enterprise are:
- Response to change
- Local business culture and practices
- Lack of perceptibility and contract deficiency
- Local regulatory standards
It is essential to consider aligning approach with TPI arrangements and the risk objectives for companies transacting business in emerging markets, such as related factors to compliance values, ethics, integrity, and risk management.
Business can potentially transfer or mitigate risks by:
- Being prepared for contingencies
- Introducing applicable performance and payment processes
- Implementing an effective anti-corruption performance and training
- Customizing practical internal controls, procedures, and policies
- Establishing fair market value
- Documenting business purpose and need
- Conducting ongoing risk monitoring
- Maintaining a contract management system
- Conducting in-depth market assessments
- Structuring specific and applicable contract language
- Considering implementing specific, clear right-to-audit clauses
- Performing due diligence
- Applying global and local standards consistently to TPI arrangements
How to Minimize Risks When Working with TPIs in Foreign Countries
The requirement by the government is that foreign companies must work through TPIs. It is indeed practical since Third-Party Intermediaries can offer essential services, such as to permit procurement and contract negotiation, and they have the cultural know-how and local knowledge.
However, businesses can be exposed to significant risks when they work with TPIs. Thus, companies can be held accountable for their intermediaries’ actions in countries like the UK, the US, and France. These fines can be many hundreds of millions at a time and, thus, are enormous. This situation can also affect the company’s reputation. Therefore, businesses must carry out due diligence beforehand to protect their company. Companies can get the red flags that doing business with a TPI can be risky with some of these red flags:
Poor Market Reputation
One of the things that matter is reputation. Before a company commits, it is good to ask contracts in the same industry about such an intermediary. The moment a company begins to negotiate with a TPI, they must start their background check. By preventing themselves from involving with the wrong types of TPIs in the first place, businesses can best protect their reputation.
Lacking the Referrals, Credentials, and Qualifications
When a TPI is a different business than the type it was contracted or lacked practical experience, companies must see the red flag. Businesses must not start working with any TPIs that resist signing standard contracts or unwilling to provide a detailed performance plan. The TPI must provide what a company will pay them, how they will report to the company, and what is required of them. A company must also be able to assert the rights to audit, such as surprise audits. It means a red flag if the TPI resists mirroring the company’s standards for managing risk.
TPIs’ Finances that Raise Questions
Another warning sign is when the TPI is in the form of charitable or political donations, accounts in a different name, offshore bank accounts, requests payments to multiple accounts, or in financial trouble. A TPI could be taking compliance and ethics seriously when companies figure that they have a channel for raising concerns and an internal whistle-blowing system. Businesses must ensure that they follow and understand corruption and global anti-bribery rules by checking on a TPI’s internal compliance programs.
Past Involvement in Corrupt-Related Litigation
Companies need to be wary if it is revealed that the TPI or any company official has been involved in enforcement actions or corruption-related investigations or litigation. Businesses must also be cautious if there have been news stories about the integrity of the TPI. It is a red flag if they have been involved in past corruption cases.