Despite living in a digitally-driven world, 80% of business document processes still involve printing, getting wet ink signatures, scanning, and faxing manually. Not only do these paper-based processes create a massive roadblock in the efficiency of your workflow, but they can also cause trouble for your brand and your customer experience.
According to recent research, more than 37% of SMB leaders face problems surrounding agreements that have either been signed by the wrong person or not filled in completely. Electronic signatures are one of the most popular digital tools that offer SMBs an easy solution for these widely-experienced issues.
However, during the early stages of research into electronic signatures, most SMBs struggle to find the answers they need. Are these signatures secure? Are they legal across all states in the U.S.? What kinds of industry-specific documents do electronic signatures support? The sooner you figure out the basics, the faster you can get going with your newly-implemented electronic signature solution.
In this blog, we will discuss 5 things that SMBs absolutely must know about electronic signatures.
(1) Digital signatures are not the same as electronic signatures
Though the terms ‘electronic signature’ and ‘digital signature’ are often used interchangeably, they are two very different things. An electronic signature is equivalent to the digitized version of a handwritten signature, and can be used by businesses to indicate their intent to approve or accept the contents of a document.
On the other hand, digital signatures refer to a category of electronic signature that leverages algorithms to generate a digital fingerprint (also known as a “hash”) unique to each document. This hash can then be linked to the identity of the person who signed the document.
An important thing to note is that, while both electronic and digital signatures can be used to sign documents legally, SMBs must understand the local regulations that apply to their situation before choosing between the two methods.
(2) Electronic signatures have the same legal status as wet ink signatures
Electronic signatures are a federally recognized form of signature. The ESIGN Act (Electronic Signatures in Global and National Commerce) in the United States and the eIDAS Regulation (Electronic Identification and Authentication and Trust Services) in the E.U. prevent the denial of legal effect, validity, or enforceability of an electronically signed document solely because it is in an electronic form.
Today, over 60 countries around the world have adopted their own set of laws and standards that recognize electronic signatures that make them legal and enforceable in a court of law, as long as the processes are designed and implemented in accordance with the requirements of the law.
(3) Electronic signatures are legal across all states in the U.S.
Contrary to popular belief, electronic signatures are legal in all 50 U.S. states. This misunderstanding mostly stems from the fact that another piece of electronic signature legislation, UETA (Uniform Electronic Transactions Act), has only been adopted by 47 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. What most people miss out on is that while Illinois, New York, and Washington have not adopted UETA, they have implemented similar statutes validating the legality of electronic signatures. In addition, the federal government adopted the ESIGN Act in 2000 granting electronic signatures the same validity as wet ink signatures across U.S.
(4) Electronic signatures are legal for most document types across many industries
While proposals, business deals, sales contracts, and just about any other kind of agreement can be signed electronically, there are a few key exceptions to most electronic signature laws around the world. For instance, both the ESIGN Act and UETA exclude property transfers, wills, and other legal notices among documents that are bound by electronic signatures. Similarly, the IT Act (The Information Technology Act) in India exempts agreements in relation to powers of attorney, wills, and real estate contracts.
(5) Electronic signatures do not require technical expertise for implementation
Integrating electronic signature technology into your workflow is easy. Most electronic signature platforms these days are rolling out built-in integration capabilities that allow SMBs to use them with their favourite applications, such as Zoho, Outlook, Office 365, and more.
This way, your employees can easily set up workflows using their favourite business apps and get back to focusing on the task at hand. According to recent research, 45% of SMB leaders agree that electronic signatures have the ability to increase employee productivity.
In addition, when choosing an electronic signature software, it is important to seek one that offers an intuitive user experience. This way, you can have your team up and running in minutes.
To learn more about electronic signatures, sign up for our free trial today!