A Notice of Power of Attorney establishes the authorization for one party to act on behalf of another in business transactions. Typically sent by a principal (the party granting authority) or their representative to a recipient who needs to recognize this delegation, the transaction may be sent proactively to establish authority or in response to a request for authorization documentation. The structure uses the BGN (Beginning Segment) to frame the notice with context and timing, the HL (Hierarchical Level) segments to organize the parties involved in the power of attorney relationship, and the SPY (Scope of Power of Attorney) segment to delineate exactly which powers are being granted, including the types of transactions or functions the attorney-in-fact is authorized to perform.

For example, Sterling Manufacturing authorizes its accounts payable director to execute payment authorizations on its behalf and sends a Notice of Power of Attorney to First National Bank. The transaction identifies Sterling Manufacturing as the principal through the first NM1 segment, names the director as the attorney-in-fact through a second NM1 segment nested in the hierarchical structure, and uses SPY segments to specify that authorization extends to payment processing, invoice approval, and check signing. The bank’s systems receive this notice, process it through the DTM date references to establish an effective period, and update their records so that subsequent transactions from the director are recognized as authorized actions on Sterling’s behalf.