“Ditch the paper” might not be a movement as popular as “ditch the plastic,” but you must’ve felt the waves. Though an entirely paperless world is still a distant concept, the business world is getting closer to achieving it.
Paper-based contracts have a myriad of drawbacks. They’re time-consuming, costly, and unreliable. Electronic signatures have, therefore, emerged as a convenient and sustainable alternative to paper transactions.
Today, we’ll discuss why you should say goodbye to pen and paper and embrace electronically signed contracts. Let’s dive in.
What is an Electronic Signature?
There are many definitions of an e-signature out there, some of which can be confusing.
Wikipedia defines an electronic signature as “data in an electronic form associated with other data in an electronic form used to sign by the signatory.”
According to the Electronic Signature & Records Association (ESRA), e-signature is “an electronic symbol, process, or sound logically linked to a record and used by someone to sign the record.”
Thankfully, Adobe provides a straightforward and less complicated definition: “a legal way to get consent or approval on electronic forms or documents.”
All in all, an e-signature is the digital version of a handwritten signature, and it can be used to virtually sign contracts. It has the same applications as a physical signature. It acts as a distinctive mark used to verify and validate contracts and documents.
Why Use Electronically Signed Contracts?
Before implementing e-sign in your business operations, it’s crucial to understand its advantages. Here’s a detailed look into the business benefits of using electronically signed contracts.
1. Straightforward and Easy to Use
Adopting new technology can be intimidating for small businesses. The need for training, maintenance, and updates restrict business owners to leverage digital solutions. Fortunately, this is not the case with e-signatures. Electronic signatures are intuitive and effortless to use.
You upload a document to the system and appoint signers and recipients. The recipient receives the link, signs the document, and sends it back to you.
Done. You have your signed document.
2. Superior Security
Contracts with paper-based signatures have security vulnerabilities. Anyone can imitate the signature and sign the document. The chances are that the paper never reaches the desired recipient. This can lead to various legal and credibility issues in the future.
Electronic signatures are safer. You can send the secure link directly to the recipient – no middlemen involved.
Besides, e-signatures also contain traceable information, such as who signed it and when it was signed. This makes the entire process way more secure and enforceable than the traditional procedure.
3. Time and Convenience
One of the major and most apparent benefits of e-signatures is convenience. Thanks to globalization, most businesses operate in different geographical locations with various partners, vendors, and customers.
In the traditional procedure, you’ll need to scan and send the document. The recipient will then print it out, sign it, scan it, and send it back to you. Not only is it time-consuming, but inconvenient and frustrating for both you as well as the other party.
With electronically signed contracts, you can drop the trouble of scanning, emailing, and printing. All you need to do is upload the document and send it to the recipient. The receiver can sign it using an e-signature and send it back to you immediately.
4. Faster Turnaround
As discussed, electronic signatures require less time. You don’t need to send and scan documents over and over again. Within minutes, you can complete the entire process.
This comes in very handy in time-sensitive situations. Instances can arise where you’ll need a signature urgently. In such cases, the traditional procedure would be unreliable. With e-sign, you can speed up the process, improve turnaround time, and bring more flexibility and versatility to your business.
5. Reduced Costs
Pen and paper costs might seem minuscule, but a study from Upstate Medical University demonstrated that businesses in the US alone spend more than $120 billion on paper forms. Moreover, most of these forms don’t last longer than three months. Many businesses also rely on postage and physical mailing to exchange documents, which further increases the costs.
Electronically signed contracts are way more cost-effective and budget-friendly. The only cost that you need to incur is a monthly subscription fee of an e-signature software solution. You don’t need to pay for any paper, posting, or mailing expenses.
6. Seamless Integration
The use of signatures is widespread. For example, a lot of companies want their invoices to be signed. Without an e-sign system, you’ll need to print the invoice from your invoice generator software, sign it, and then send it to the desired recipient.
E-sign solutions integrate seamlessly with invoicing solutions. Thus, you can generate an invoice with your free invoice and billing software for Mac or Windows, sign with your e-sign system, and send it across.
The Rise of Electronic Signatures
According to Markets and Markets, the electronic signature market is currently valued at $2.8 billion and is anticipated to reach $14.1 billion by 2026, with a CAGR of 31.0%.
Several factors have contributed to this rise. The digitization of business operations has been one of the essential drivers of digital signatures. As discussed, e-sign systems integrate with other digital solutions to provide superior convenience to small business owners.
The COVID-19 pandemic has also accelerated the demand for e-signatures. With social distancing and contactless operations becoming the new normal, businesses across all industries have transitioned to electronically signed contracts.
The top industries that are readily adopting e-signatures are:
- Banking, financial services, and insurance
- Healthcare and life sciences
- Real estate
For small businesses, it’s a clear alert to add digital capabilities to their operations. The pace with which the use of digital signatures is surging indicates that it might overtake paper-based signatures in a few years.
It’s okay if you’re still enjoying pen and paper signatures. There’s no need to panic and overturn your operations overnight. But at the same time, it’s essential to understand the benefits of e-signatures and how they can help your business.
Additionally, digital contracts are the future, and implementing them in your business can give you a significant edge over your competitors.