Paper-based documents in the past required what now gets termed as a “wet” signature, or a handwritten name.
More formal document contracts required witnesses to the trademark, and an initial on each page, for both the signatory and the witnesses. This process can be cumbersome and time-consuming. As a result, contracts or agreements often went unsigned. Even signed agreements ran the risk of being challenged in court.
Electronic signatures are the most secure and tamper-proof way of signing documents. In most countries, esign solutions are permitted through legislation, defining what constitutes digital signatures. Electronic signatures require software for their generation and can look quite different from a traditional sign. In some cases, for the familiarity, they can include a record of the electronic signature.
The concept of an e-signature dates back as far as 1976, although later refined standards emerged in 1984. Now millions of documents are signed globally using e-signatures, as the concepts become widely adopted.
Electronic Signatures Can Enhance Security
Reducing the need to chase stacks of paper doesn’t only cut down on time. A digital signature solution, with data encryption measures, user verification, and secure servers, might be a safer way to store contracts than bundled into a filing cabinet. You can more easily track who viewed agreements and when they signed them. This added control is vital to protect proprietary information and to avoid legal disputes over precisely when a contract went into effect.
One of the critical elements of using electronic signatures is being able to prove the identity of any signing party. You should also demonstrate that they knew what agreement they were entering into by providing an electronic signature. Mississippi Business Journal recommends in their article, the setting up of dialogue boxes that reflect this. At times, customizing a dialogue box isn’t an option. Your legal department may have suggestions about how to remind people that their electronic signature will constitute a legally binding agreement. Getting a message saying something like you agree that your sign in a digital format will have full force and effect. It also represents your participation in the contract agreement set out may hold up better. It sounds better than a standard, “Click to proceed” message if any dispute should arise.
Going Paperless Saves Money and Improves Organization
Office supplies may not come up in conversation as a significant expense for a business. However, all those reams of paper add up, and so does the cost of space to store paper contracts, printers, and other equipment and supplies. Factor in the value of the extra time needed to send paper contracts, opportunity costs, and any costs or penalties that result if a paper contract is misplaced. The actual value could be many times higher than the office supply store bill says.
Maintaining a more organized office helps businesses capture the benefits promised in their contract agreements. Working within an intuitive, well-integrated digital system can make it easier to locate files and meet deadlines. Starting with a free electronic signature application for financial industry within that same system eliminates the risk that a newly signed contract will languish in a forgotten corner of the office. Instead, deals can get started within the same organized system where they will remain throughout the agreement.
Electronic Signatures Fit Modern Business Practices
It is hard to imagine how businesses managed to get things done before the Internet. Many people not only use email and Internet research in their day-to-day business operations. They check-in from a smartphone or other mobile device when they’re away from the office as well. The speed of communication and depth and breadth of information available via online sources is difficult to match elsewhere.
Some estimates predict that e-commerce sales for retail will double in the next few years. This growth does not get restricted to retail sales. Organizations in virtually every industry can get found online. There’s every reason to expect that businesses will continue to seek more opportunities and negotiate relationships online.
Electronic signatures integrate seamlessly into the way many organizations do business. After using computers to draft, edit, and send versions of a contract back and forth, there’s no need to suddenly dust off the fax machine. You can also send someone across town with a pile of papers to sign. Businesses can complete a contract agreement in a fast, secure format online.
Wet Ink Signatures
In most cases, esign online electronic signature service is an equally valid option, if not a preferable one. However, there are still some instances when a traditional handwritten or “wet ink” signature is yet required.
In some cases, another party may request to use traditional signs. Whether you think this is a sign of being behind the times or not, if the other signing party exercises their right to opt-out, you’ll have to get a pen handy.
Some industries have additional guidelines that must be upheld to ensure that an electronic signature is valid. HIPAA, for example, has strict privacy and security requirements to protect sensitive data. Organizations in the finance industry may pay close attention to the Dodd-Frank Act, which includes provisions for active consent from the signatory regarding e-signatures.
State regulations may also influence when electronic signatures are a valid option. As of 2015, New York, Illinois, and Washington were the only states that had not adopted the UETA, although New York and Illinois had enacted similar legislation. The ESIGN Act still applies to Washington. If your organization engages in business in these states, it’s important to review applicable regulations carefully.
The UETA may not cover documents like wills, codicils, and beneficiary trusts. There are some additional exceptions, including any that an individual state may enact. Double-check with legal counsel before proceeding with electronic signatures if you’re not sure which options get legally recognized in your country.
While it seems that electronic signatures are here to stay, wet ink signatures aren’t entirely dead, either. They may never become entirely obsolete. In the coming years, the handwritten signatures will probably get relegated. As a result, the e-signatures may continue to rise. It will be the preferred method of formalizing contracts between businesses across most industries.