Published on
May 12, 2023

A comprehensive guide to electronic signatures

What is an Electronic Signature?

An Electronic Signature is a digital alternative to handwritten signatures, eliminating the need for paper-based signatures. It is legally valid and indicates a person’s intent to agree to the contents of a document or data set. Electronic signatures are widely used for contracts, agreements, and forms and are legally binding in most countries. According to a 2021 study, 95% of organizations either use or plan to use e-signatures.

Types of Electronic Signatures

There are three types of electronic signatures.

  • Simple Electronic Signatures: Similar to pen signatures, you can create simple electronic signatures using electronic methods such as typing your name or drawing your signature on a screen.
  • Advanced Electronic Signatures AdES: Advanced Electronic Signature Adds a layer of security by verifying your identity, much like using a special pen.
  • Qualified Electronic Signature: This provides the highest level of security, similar to having a notary public witness your signature and confirm your identity when signing a document.

For a more detailed explanation of the types of electronic signatures, examples, and other useful resources, please visit “Three Types of Electronic Signatures for Secure and Legally Binding Documents

Are Electronic Signatures Secure?

Simple electronic signatures are basic digital signatures that do not require advanced security features or certificates. They are easy to use and create using various methods, including typing your name, drawing your signature on a screen, or clicking a button to indicate your intent to sign.

Advanced electronic signatures (AdES) are more secure than simple ones and use digital certificates to verify the signer’s identity. AdES can provide additional security features such as encryption, timestamping, and signature validation, making them suitable for more sensitive documents.

Qualified electronic signatures (QES) are the most secure and recognized as legally binding in most countries. They require a digital certificate issued by a trusted third-party provider and use advanced encryption and authentication measures to ensure the highest level of security and integrity. QES are for sensitive documents such as legal contracts, financial agreements, and government documents.

Difference between Electronic and Digital Signature

Electronic and digital signatures differ in their level of security and identity authentication.

Electronic signatures refer to any electronic method of indicating intent to sign, while digital signatures use advanced encryption and authentication techniques for secure identity verification and document integrity. You can use them for everyday business transactions where it is sufficient to have lower security and authentication, such as contracts for goods or services.

Digital signatures are best used for sensitive documents that require higher levels of security and authentication, such as legal documents, financial transactions, or medical records.

While both provide convenience and efficiency in signing documents electronically, digital signatures offer an added layer of protection for valuable and sensitive information.

Best Practices for Electronic Signatures

  1. Define your e-signing policies: Establish clear procedures for who can sign electronically, how you obtain signatures, and how you manage and store them. Ensure your framework complies with applicable laws and regulations, e.g., The eIDAS Regulation (910/2014) sets the legal framework for electronic signatures in the EU. In the US, ESIGN Act, a federal law passed in 2000, recognizes electronic signatures and records as legally binding if all parties agree to use and sign electronic documents.
  2. Prioritize documents: Not all documents require e-signatures. Determine which documents are most appropriate for e-signatures based on factors such as frequency of use, importance, and ease of implementation. Create a roadmap for implementing e-signatures on priority documents.
  3. Use a trusted e-signature tool: Choose a provider that meets your security and compliance requirements. Look for features like tamper-evident audit trails, strong authentication and encryption, and compliance with relevant laws and regulations. Use templates to ensure consistency and efficiency in the e-signature process. Courts require three conditions to validate e-signatures:
  • A digital seal with origin-tracking capabilities
  • A traceback to the original signer in the audit trail
  • Reliable identity verification techniques

To read more about the best practices of implementing electronic signatures, read “Seven Best Practices of Implementing Electronic Signatures.”

Benefits of Electronic Signature

As a large team, you can benefit significantly from using electronic signatures. Here are three reasons why:

  1. Speed: Firstly, electronic signatures increase contract speed. You’ll be able to close deals more efficiently, giving you an edge over the competition.
  2. Security: Secondly, electronic signatures enhance security. With tamper-proof digital signatures, you can eliminate the risk of fraud and document tampering, building trust with your customers.
  3. Cost: Thirdly, electronic signatures lower transaction costs by eliminating the need for printing, shipping, and handling paper documents, leading to reduced overhead costs and faster turnaround times.

To understand the benefits of electronic signatures in more detail, read “Signed, Sealed, and Delivered: Five Benefits of Electronic Signatures

Use Cases of Electronic Signatures

You can use electronic signatures for contract signing and administrative or HR processes like employment contracts, benefits paperwork, privacy notices, e-invoice, and non-disclosure agreements.

  1. Sales: As part of the sales team, you can streamline your sales process and close deals faster using Electronic signatures. Use electronic signatures to sign contracts, proposals, NDAs, purchase orders, invoices, and agreements. It will eliminate the need to print, mail, and wait for customers to sign documents. Switching over to electronic signature also improves customer experience and document turnaround time.
  2. Legal: Legal teams can simplify their processes by providing a secure and efficient way to sign and share legal documents. You can sign and share contracts, agreements, and other legal documents with internal stakeholders, clients, and partner firms. It can enhance your firm’s security and compliance with applicable regulations.
  3. Operations: Electronic signatures can improve the efficiency and accuracy of operational processes. Electronic signatures allow you to sign and approve purchase orders, invoices, and other documents. It speeds up the approval process, reduces errors, and provides a clear audit trail of all approvals.

To avoid revenue leakage and save time, ask our experts how Docfield can help your contract processes and discover more about Docfield Contract Management and automation software.