The Importance of Digital Signatures for a Business
Digital signatures have existed since the 1980s, after the first e-signature software was developed. However, its popularity rose in the 2000s after the US passed the E-Sign Act into law, giving e-signatures legal recognition. Since then, the digital signature market has seen immense growth, with its market value growing to over $3.9B million in 2022 and expected to grow to $40B by 2020.
Unlike traditional signatures, a digital signature shows the sender, the time, and the date. It is also easier to know whether it has been tampered with, making it more secure. This gives digital signatures many benefits over traditional signatures, making it useful for businesses.
Most businesses now use digital signatures to embrace technology and make work easier. Digital signatures encourage remote working, which many people currently prefer.
This guide elaborates more on the benefits of digital signatures, their legal validity and compliance, tips for implementing them, and much more.
Benefits of Digital Signatures
The main reason any business should use digital signatures is because they come with a lot of benefits.
Some of the benefits include:
Lower Operation Costs
A business that uses traditional signatures must print documents before physical signing, which wastes resources. Remember that buying paper is costly. Furthermore, the organization must employ someone responsible for printing, scanning, and sending the document to different parties for signing.
However, with digital signatures, this will be a thing of the past as no printing is needed. Instead, one simply signs electronically using software, saving costs and time. Moreover, there is no need for filing, storage, or disposal of printed documents that occupy office space.
Better Security
Furthermore, digital signatures are more secure as they cannot be altered. Public Key Infrastructure (PKI) is a means of creating, distributing, and securing digital signatures. PKI uses public and private keys, helping to prove document authenticity and maintain confidentiality. The recipient can verify that a document is authentic, as they can see it has been signed by a public key controlled solely by the sender. Furthermore, the sender can prevent unauthorized access to confidential documents by only allowing documents to be opened by specific parties who have a private key.
If there are any changes made to signed documents, the relevant parties will be notified, meaning they are difficult to forge. Businesses using digital signatures must also comply with data protection policies, failing which they are liable to pay penalties. This helps keep data secure.
Improves the Company Image
It is good for any business to incorporate digital signatures in this digital era, where most businesses adopt advanced technology to make work easier. Digital signatures help companies look more professional and credible. This enhances the organization's image, which can also bring about more benefits.
Increased Productivity
An organization that uses digital signatures improves employee productivity as less time is wasted. Since digital signatures encourage remote work, workers can work from anywhere at any time, improving collaboration.
According to a recent study, allowing employees to work remotely from their preferred location improves productivity. This helps businesses become more productive in attaining their goals.
Legal Validity and Compliance
Digital signatures are legal and valid under the law. The E-sign Act 2000 (Electronic Signatures) gave e-signatures similar legal recognition as compared to physical signatures. UETA (Uniform Electronic Transaction Act, another federal law governing digital signature, ensures that digital signatures are uniformly accepted throughout the United States. For day-to-day business documents, digital signatures are broadly equivalent to physical signatures.
According to these laws, digital signatures are valid and enforceable if they are identifiable. More specifically, the signer's intent and the signature's link to the document must be known. Most businesses show clear intent and consent to sign an e-agreement by either clicking the "accept” button, typing their name, or drawing a sign.
However, some states such as New York, Illinois, and Washington state have not passed the UETA act. In New York, while most digital signatures are the same as paper signatures, this method still cannot be used for wills, trusts, powers of attorney, healthcare proxies, and certain other documents. These exceptions are worth bearing in mind.
A business must have a PKI compliance certificate to comply with a digital signature. The certificate must have the signer's identity or any identity that can be authenticated or encrypted. However, an organization must also comply with other establishment guidelines, like those established by FINRA.
Tips for Implementing Digital Signatures in Your Business
Use the following tips to implement digital signatures in your business:
Understand How the Software Works
Any organization that intends to use digital signatures must understand how the software works before investing in the right one. Remember, there are several digital signature apps with different features. Before deciding, go through the user reviews section and pick the right one that can meet your needs.
Ensure Compliance with Regulatory and Industry Standards
Before an organization invests in any digital signature software, it is also important to understand industry standards and laws. This should be added to the e-signature legal framework that makes the use of digital signatures valid.
Know your industry-specific legal requirements for digital signatures and their implications. Remember health, legal, real estate, and finance sectors all have their own specific restrictions. At this stage, it is usually worth consulting with a lawyer.
Opt For the Right Tool
When choosing digital signature software, ensure it be easily accessed by all signing parties without any challenges. The process should ideally use a single system under central control. It should also be efficient, cost-effective, and meet the organization's needs. Software that can be integrated into existing tools (such as a CRM or ERP system) can further streamline your business processes.
Encourage Collaboration
Adopting digital signatures in an organization may meet some internal resistance. Ensure to clearly communicate the change and specifically its benefits as well as its uses. If possible, provide guidelines for signing a document online and start with simple signing processes. Lastly, ensure that all major departments, and especially the legal department, participate in its implementation.
Write and Publish a Signature Policy
After completing the steps above, ensure to write and publish an internal policy governing digital signatures. You may wish to customize an existing template policy for your own needs. A customized policy will be easier to implement as every business as unique processes. By publishing a digital signature policy, your business is more likely to remain compliant with laws governing this area.
Digital Transformation: Embracing Technology for Business Advancement
It is evident that most businesses are embracing the use of digital signatures in a bid to streamline their operations. Digital signatures help automate services and save costs and time. It also encourages productivity and remote working, which enhances collaboration.
As the world embraces new ways of doing business, do not let your organization fall behind. Instead, stay one step ahead by embracing digital signatures. Investing in the right digital signature software and understanding the new legal landscape will allow you to get ahead.