Businesses have switched from printed copies of documents to digitalized options, mostly stored in the cloud. Consequently, even signatures have become digitalized. Today, signing contracts and letters digitally is a common business practice. Let’s learn more about electronic signatures in business.
A Quick Introduction
Electronic signatures or e-signatures are a way to legally sign contracts online using an encrypted digital marker that captures the intent and consent of the signer on agreements and electronic forms.
Because electronic signatures can be used to sign documents in various formats including PDFs, Word documents, spreadsheets and native browser-based contract platforms, they’re widely adopted in most of the world.
Electronic signatures are highly adaptive, cost-effective and they speed up transactions and timelines since the contracts can be signed in seconds.
How do Electronic Signatures Work?
Let’s assume Anna and Violet are signing a sales contract.
So, Anna selects the contract where she has to add his signature, and then she processes the contract to add the hash value using the encryption algorithm. Now the contract is encrypted using Anna’s private keys to create the electronic signature and the contract file with Anna’s signature is sent to Violet.
Violet decrypts Anna’s signature using her public key. She compared the signed contract file’s hash value with the original contract file’s hash value. If the values match, Anna has signed the contract without any error. But if there’s a mismatch (some forgery has happened), Violet will be unable to decrypt Anna’s signature.
The underlying technology that enables eSignatures to work the way they are supposed to is known as Public Key Infrastructure or PKI. A PKI combines private and public keys to encrypt and decrypt eSignature. It uses cryptography algorithms.
PKI helps eSignatures to:
- Create a unique identity with a hash sequence
- PKIs ensure that eSignatures are safe and no one can replicate or replace them
- Through PKI, eSignature guarantees that the signee’s approval is not tampered while signing.
- Additionally, PKIs also use a trusted third-party Certificate Authority or CA that endorses a signee and their keys. So it adds another layer of security to the process making it tamper-proof.
How do Electronic Signatures Benefit your Business?
As compared to traditional ink-based signatures, e-signatures have several benefits. They include:
1. Simple and efficient – If everyone who needs to sign a document has an email address and access to a device with the internet, collecting needed signatures is relatively easy. If the document is stored on a cloud-based platform, you can easily give access to people who need to sign it.
With the access, the document to be signed is instantly available. They do not have to wait for the contract to arrive via mail or courier, then sign it and send the signed copy back. Instead, the receiver opens the document, attaches their electronic signature to it and emails it back.
Read Also: How to Accelerate your Contract Management Workflow with eSignatures
In addition to being simpler to manage than physical signatures, integrated signatures speed up the process of getting documents signed. This is because every stakeholder who needs to put their signature on the contract can access it at the same time. Within seconds, the document is signed.
2. Legally binding – In 2000, the US passed the E-sign act, which entails what is an electronic signature and gives electronic signatures the same authority as their ink-based counterparts. All states have adopted the UETA (Uniform Electronic Transactions Act) that authorizes the use of electronic signatures.
3. Cost-effective – When you store files in the cloud and collect electronic signatures, several typical office costs (cost of courier, postage, time spent in delivering envelopes and scheduling courier pickups) are eliminated. In case of sensitive documents requiring ink-based signatures, a person has to travel to an office to sign the agreement in person or use a notary.
Whereas electronic signatures verify identities without the need for a third-party or an extra trip to the signees’ physical location.
4. Secure – E-signed documents are hosted in a secure cloud-based infrastructure. Multiple layers of protection like bank-grade SSL and multi-factor authentication give added security.
5. Audit trail – Opening a document and knowing exactly who signed and when is essential for tracking purposes. With integrated eSignatures, you can also access a full audit trail of negotiations and edits that are timestamped, helping your business manage version control.
How to Create an Electronic Signature in Revnue?
eSignatures by Revnue simplify contract management by enabling you to execute contracts more efficiently. You can collaborate with your team and sign contracts with the click of a button. Integrated eSignatures allow you to export your signed contracts automatically into Revnue. Right from assets, suppliers and customers to contracts and electronic signatures, everything is stored in one place.
What are Electronic Signatures Used for?
1. Sales – The increased speed of electronic signatures is of immense benefit to sales teams. Further, eSignatures on sales contracts and NDAs take out the guesswork from the process. Your sales teams will know immediately when a person opens the document and signs it. This helps them to follow up and quickly close deals.
2. Procurement – Vendor onboarding can be a time-consuming process that often impacts your bottom line. With Revnue contact management platform’s eSignature you can send vendor agreements that they can sign right away and get started on providing raw material immediately.
3. Human resources – Electronic signatures can give a smooth onboarding experience to the new joiners and create an excellent first impression. All the paperwork gets signed electronically using integrated signatures instead of the employee having to sign page after page of the employee agreement. They can easily navigate the electronic document and sign in all the right places.
Read Also: Benefits of Integrating eSignature in Contract Management
Even after the employees join the company, the HR department can use eSignatures for the current employees to verify their information annually, including changes in their salary, status and simply the HR processes.
4. Legal – By providing clients and employees electronic access to non-disclosure agreements and other contracts, legal teams spend less time on paperwork. Reusable contract templates minimize errors, create the perfect contract templates in minutes and free up the legal team to focus on substantive legal work.
5. Finance – Your finance team can use electronic signatures to approve invoices electronically, approve procurement and purchase orders and sign off on budgets with just a few clicks. eSignatures also add a layer of verification and security to your contracts and agreements.
If you’re looking to create reliable and secure electronic signatures for creating enforceable documents and agreements, Revenue can help. Revnue’s contract lifecycle management platform improves workflows, speeds up operations time and helps you collect more electronic signatures.