Why Your Business Needs To Use Electronic Signatures
In today’s digital age, the shift towards paperless solutions in business is evergrowing. Not only does this offer environmental benefits, but in some operations, it can actually increase productivity and workplace security. As companies continue to automate their digital processes, handwritten signatures are quickly becoming a thing of the past.
This is where electronic signatures come into play. Used to verify the legitimacy and validity of digital messages, electronic signatures are the modern equivalent of ink-based signatures. In fact, an electronic signature offers far better protection against doctoring or impersonation because it can track a digital message’s origin progress, and most importantly, the signer’s informed consent. There are substantial benefits for businesses using electronic signatures, including reduced costs, greater electronic security, as well as increased efficiency and revenue.
Let us guide you through everything you need to know about electronic signatures to transform your digital processes and ditch the pen and paper for good!
What is an Electronic Signature?
Let’s begin with what an electronic signature actually is. Put simply, an electronic signature is a digital form of signing online documents, such as legal agreements, contract reports, and financial documents. It is the virtual copy of a person’s unique physical signature that governs whether a specific document is accepted, or rejected.
A digital signature is very similar to an electronic signature and both serve a very similar purpose. An important difference to note is that a digital signature is a technical term for a data sequence that has been verified by a mathematical algorithm. Conversely, an electronic signature is typically used in legal terminology. Both will be used interchangeably throughout this article given their similarities, but do keep in mind that both are separate constructs in different contexts.
Due to its public-key cryptography, electronic signatures have the ability to validate and track signature information at each stage of a contract’s journey, from sender to recipient. Because of this advanced security, electronic signatures are deemed legally sufficient and safe to use when transmitting sensitive documents. Electronic signatures adopt a public key algorithm, meaning two electronic, encrypted keys are created that are mathematically linked. The two keys are composed of one public and one private. A private, encrypted key is created by the person sending their electronic signature and is only accessible to that signer. To access the digital signature on the recipient end, a public key is required to decode the data. Anyone who has had the public key shared with them can access the electronic message. If the public key is unable to decrypt the message on the recipient end, this indicates there is either an issue with the document or with the electronic signature. It is this mathematical algorithm that validates an electronic signature.
Are Digital Signatures Legally Binding?
For the most part, electronic signatures are legally binding in most countries across the globe. Depending on the context, electronic signatures can even provide greater legal efficacy than handwritten signatures, due to their advanced security standards.
Before continuing, it is worth mentioning that different countries’ legalities will govern whether an electronic signature is valid or not. The place of residence that a person or business resides in will be the law applied, e.g. an Australian company will follow Australian laws. In circumstances of cross-country exchange, such as an Australian company consorting with a business in the United States, both countries’ laws must be abided by for the digital message to be considered legally binding.
In the United States, digital signatures are deemed legally binding and are seen in the same light as handwritten signatures in most cases. The only exception is when Class 1 signatures are being used due to its basic security. Such signatures are only adopted in low-risk environments where business documents need to be authenticated. Conversely, in Australia electronic signatures are sufficient for most agreements, but not deeds. Deeds have not been considered legally binding up until recently, with unceasing COVID-19 lockdowns forcing businesses and government officials to relax such laws and allow temporary permission of electronic signatures on legal documents. In New Zealand, similar laws are in place. Part 4 of the Contract and Commercial Law Act 2017 grants electronic signatures legally valid in any case that a handwritten signature is also. However, this does not include wills, affidavits, powers of attorney, and other legal deeds.
In the EU, a specific law controls the use of all electronic identification for citizens. This includes electronic signatures, which are governed under the Electronic Identification, Authentication and Trust Services (eIDAS). Under this law, electronic signatures are considered legally binding except for cases of property transactions. Much like the rest of the world, the UK has modified these laws to allow legal validity where ‘witnessed electronic signatures’ are now acceptable in cases they weren’t before, due to pervasive COVID-19 restrictions.
What are the Benefits of Electronic Signatures?
Clearly, electronic signatures offer a high level of security. This is largely due to asymmetric encryption processes that prevent a document from being altered, in turn legitimizing the digital signature. However, there are many other benefits of electronic signatures that can increase business productivity and revenue. Most notably in times of COVID restrictions, is the increased flexibility it offers employees to work remotely. Being able to sign important documents on the go, or from home, means it is much easier to conduct business without the rigmarole of having to scan, physically sign, and re-scan again. With many countries relaxing their laws surrounding the legal validity of electronic signatures, such as the UK and Australia, it’s likely these temporary changes will remain permanent in the future.
Similarly, electronic signatures also improve workplace efficiency by automating the workflow. Document owners can easily track the progress of contracts as well as locate and retrieve stored forms, all in a safe and secure manner. By streamlining performance, every part of a contract’s journey will be systematic and coherent.
Coupling these points together, electronic signatures can reduce hefty operational costs in organizations. By increasing efficiency and productivity, more money can be allocated to other important projects and propel your business to uber success. Additionally, businesses won’t have to fork out large costs on printing, postage, and other expensive storage costs. Lastly, electronic signatures can minimize human error by providing rigid security authentication checkpoints. An audit report can also be drawn to track where something may have gone wrong, helping businesses stay diligent and compliant.
Best Practices for Electronic Signatures
If you’re wanting to integrate electronic signature software into your workplace, here are a few tips on the best practices to follow so you are maximizing this paperless method. While electronic signatures offer top security, you’ll want to look out for certain security features in the software. DocuSign, for example, uses AES 128-bit encryption and SSL 256-bit encryption - the most secure encoding tool available.
Secondly, look out for software that allows you to convert old documents with handwritten signatures, into electronically viable formats. Given the increasing legal validity of electronic signatures, optimizing your documents with the appropriate software can save a lot of time, money, and stress in the long run. Lastly, ensure the software has built-in auto-reminders that prompt you to update contracts when needed. This will save you from chasing down late signatures and contracts that could lead to upset customers and employees down the line.
Why NOT to use Google Docs for Contracts
Refrain from using applications such as Google Docs to upload your contracts onto. Many companies have banned Google apps from the workplace due to data security issues. Unlike other software, Google Docs does not offer the same level of data sovereignty due to a lack of control over the server location. This can spur aimless security breaches as data moves between servers outside of the relevant authority. This is why many businesses are shifting away from Google Docs and using far more secure and useful digital signature apps, such as Contract Eagle. Contract Eagle integrates two renowned digital signature platforms, DocuSign and Secured Signing, into the application so your data is safe and protected against attack. With the highest level of data security available, contract signing is accurate, secure, and seamless with Contract Eagle.
Electronic Signatures with Contract Eagle
If you’re looking to speed up contract submissions on a secure application, Contract Eagle is the perfect option. By automating the signing process, contracts will be visible to your team the moment it’s signed, in turn, accelerating business transactions and deals. The application also integrates two leading electronic signature platforms - DocuSign and Secured Signing. Both platforms provide rock-solid security so you can rest assured knowing your information is safe and secure in the highest-level level of encryption available. With additional access to Contract Eagle’s collection of compliant templates, you can reduce tedious office work and focus on bigger, more important projects. The application’s auto-reminder features will take care of compliance for you, making the entire contract signing process easier, faster, and more secure for your team.
Contract Eagle is simple to use, reliable and safe. Unlike other digital signature apps, Contract Eagle combines service with security so you can communicate directly with the team to address any ideas or concerns. Contract Eagle offers a hub of experts that are committed to keeping your data secure as well as configuring the platform to suit your organization’s needs.
Book a Demo Call
The Contract Eagle expert team is committed to securing your contract signing processes. With leading electronic signature platforms integrated into the application, the team will help onboard you and get you running in just 30 days. Forget spending unnecessary time learning an electronic signature software, setting it up, and then upskilling employees. With Contract Eagle, you can transform the way you do contract signing to increase efficiency, productivity and revenue. Get in touch with the Contract Eagle team and book a demo call today!