Over the ages, people have used various techniques to complete transactions. In ancient times, it was common to rely on eyewitness verification or seals that kept documents firmly closed until they were delivered. By the Middle Ages, people often used marks or symbols to verify they had personally authorized a document. Eventually, it became standard to authorize documents by spelling out a person's name. The creation of a signing machine, also known as an autopen, simplified the process for people who had a lot of documents to sign.
Fast forward to modern times. Many businesses have switched from printed copies of documents to digital versions, often stored in the cloud. As documents have become digitized, so have signatures. Today, many contracts or letters can be signed without having to put pen to paper. Read on to learn more about the use and benefits of electronic signatures.
What is an electronic signature or e-signature?
An electronic signature allows a person to give consent or show they approve of the contents of a document. Also known as e-signatures, electronic signatures can be legally binding for many uses. E-signatures can take several forms: the individual's name typed out, an uploaded image of the person's cursive signature, or a signature drawn on the screen of a smartphone or tablet. Some electronic signatures use digital identifiers to verify that the person signing a document is who they claim to be.
Generally, e-signatures can be used to replace traditional or ink-based signatures for many uses around the globe. In the U.S., the Electronic Signatures in Global and National Commerce Act (E-Sign Act) confirms that electronic signatures have the same legal effect as handwritten signatures for most types of transactions — as long as an individual gives their consent. In the European Union, EU Regulation No. 910/2014 allows something similar.
Electronic signature vs. digital signature
The terms digital signature and electronic signature might sound synonymous, but the two are not the same and shouldn't be confused with each other. One way to understand the difference is that all digital signatures are a type of electronic signature, but not all electronic signatures are digital signatures.
A digital signature is usually more secure than other types of electronic signatures. At its simplest, an electronic signature offers a way for someone to attach their name to a document. Digital signatures go a step further and actually confirm the person signing is who they claim to be. Before an individual can digitally sign something, they need to provide a form of certificate-based authentication. The person signing must provide a password or PIN, and they also need access to a private key.
Another way to understand the difference between a digital signature and an electronic signature is the comparison of a signed and notarized paper document versus a signed paper document that has not been notarized. When someone signs a physical piece of paper, they put their name or mark on it. If they sign in the privacy of their office or home, there's no real way to verify they are who they claim to be or that someone else didn't forge their name.
Enter a notary. A notary witnesses a person signing a paper document after looking at identification and confirming they are the individual who should be signing. Digital signatures offer the same additional layer of verification that you get from notaries.
Along with using additional methods of verifying an individual's identity, digital signatures typically have features such as encryption and audit trails that ensure the signature is legitimate and reduce the risk of document tampering.
Benefits of an electronic signature
Electronic signatures have several benefits, especially when compared to traditional, ink-based signatures. Some of the advantages of electronic signatures include:
1. Simple and efficient
Provided everyone who needs to sign something has an email address and access to a device that connects to the internet, it's relatively easy to collect the needed signatures. If you store the document on a cloud-based platform, you can give access to the people who need to sign it.
Once they have access, the document is available to them instantly. They don't have to wait for it to arrive in the mail or via a courier. They also don't have to print out the contract or agreement, sign it, and send the signed copy back to you. Instead, they can open the document, attach their signature to it, and be finished.
Along with being simpler to manage than physical signatures, e-signatures also speed up the process of getting documents signed. Everyone who needs to put their signature on a contract or agreement can get access to it at the same time. They can all sign within minutes. Unless you choose to set a signing order, there's no need to have one person sign, then send the contract to the next person, then on to the next until it gets back to your business.
2. Can be legally binding
The rules governing electronic signatures vary by region. For example, under the EU's Electronic Identification and Trust Services Regulation (eIDAS), e-signatures are enforceable. But an e-signature needs to be a digital signature for it to have the same status as an ink-based signature in the EU. Since its departure from the EU, the United Kingdom has adopted its own form of eIDAS, known as U.K. eIDAS.
Japan's Act on Electronic Signatures and Certification Business notes that e-signatures are as valid as ink-based or so-called wet signatures. Unlike the EU's law, which gives more weight to digital signatures, Japan's law views digital signatures the same as other types of e-signatures.
Other countries where e-signatures have the same or similar weight and enforceability as wet signatures include:
- United Arab Emirates
It's a good idea to review the e-signature laws for particular regions.
Paper-based signature collection isn't the most environmentally or resource-conscious process. First, there's the need to print out at least one physical copy of the contract or agreement. The first individual signs it, then sends it to the next signatory. Depending on how the document gets passed along, transportation can involve a fair amount of fuel and energy use. The document then needs to travel to the next individual or back to the original owner.
Once everyone's signed a paper document, each signatory typically requires a copy for their own records. That means more paper and ink used, and more energy and fuel needed to send the paper contracts or agreements to each person.
There's no paper or ink needed with electronic copies, which helps save forests. There's also no need to physically send the contracts from point A to B and back again.
Think of the costs traditionally connected to signing documents. There's the cost of paper products, ink, or toner — plus the cost of maintaining printers and copiers. There are also postage or courier costs to consider, plus the time spent delivering envelopes to the post office or mailbox or scheduling a courier pickup.
Storing files in the cloud and collecting electronic signatures eliminates many of the typical office costs. It's also cost-effective because it cuts down on travel expenses, particularly when used for sensitive documents. With ink-based signatures, a person would often have to travel to an office to sign in person or use the services of a notary. Digital signatures verify identities without the extra trip or need for a third party.
E-signed documents can be more secure than paper-based documents. A lot can happen to printed and signed documents. Someone can spill their morning cup of coffee on a contract, making it illegible. A paper contract can get put in the recycling or shredded accidentally. There can also be the risk of physical theft of the document.
Secure cloud platforms can keep e-signed contracts and other documents safe and sound, away from prying eyes, bad actors, and coffee mugs.
What are e-signatures used for?
Businesses in every industry can benefit from electronic signatures, and they offer advantages for nearly every department in a business. Take a look at some examples of how various departments might benefit from electronic signatures:
Your sales department can benefit from the increased speed of electronic signatures. Collecting signatures on NDAs and sales contracts electronically takes a lot of guesswork out of the process. Your team can immediately see when a person receives and opens the contract and when they've signed it. If there's a delay in collecting the signature, they can quickly follow up to confirm the lead is still interested in working with your company.
2. Human resources
Using electronic signatures can help your business make an excellent first impression on new hires. E-signatures help smooth out the onboarding process by ensuring new hires get all the paperwork they need to sign in one fell swoop. Instead of flipping through page after page of a contract or employment agreement, they can easily navigate the electronic document, ensuring they sign or initial in all the right places without missing a signature.
Since e-signatures reduce or eliminate much of the traditional paperwork back-and-forth dance, a new hire can go from being a candidate to being on the job in less time.
Human resources departments can benefit from electronic signatures even after employees are brought on board. Using e-signatures when current employees verify their information annually — or whenever there's a change to their status, salary, or benefits — could simplify these processes.
Working with new vendors can help your company save money, especially if the new supplier charges less or provides a better service. But the onboarding process can be time-consuming, eating into your bottom line. With a cloud-based platform, you can send new vendors agreements immediately, accelerating your onboarding process. If you collect e-signatures, your new vendors can sign their agreements right away and get started providing the services or materials immediately.
The legal department can benefit significantly from the use of electronic signatures that comply with industry standards for encryption and security. Providing clients or employees electronic access to documents they need to sign, such as non-disclosure agreements and other contracts, frees up the legal team from chasing down authorized signers in person to instead focus on substantive legal work.
Collecting electronic signatures can make life a lot easier for executive and administrative assistants and other members of the admin team. If your admin team spends a considerable amount of each day collecting or following up on contracts, collecting leases, or gathering non-disclosure agreements, using e-signatures can streamline their workdays.
The admin team can also use electronic signatures to have members of the management or executive team sign off on projects or agreements when needed.
Say your marketing team wants to work with an external agency for your company's next campaign. They just need to get the executive team to sign off on it, so they can engage the agency's services. By collecting e-signatures internally from executives and externally from the agency contact, you can go from idea to campaign rapidly. And that, in turn, enables your company to grow more quickly.
Electronic signatures can streamline operations in the finance department, too. Your finance team can approve invoices electronically, approve purchase orders, and sign off on budgets using electronic signatures. If necessary, digital signatures can add a layer of verification and security to the finance team's content.
Recent shake-ups in the way companies do business and manage their teams mean more and more workflows and transactions are moving to the cloud. As some people return to working in-office, many have found the remote work lifestyle works best. There's a greater need for secure, compliant digital transactions and communications now more than ever before.
Enter Box Sign, which is now part of the Content Cloud. Box Sign provides electronic signatures natively in Box. With it, you get a secure, seamless, and simple signing experience. Whether you need to have offer letters signed, collect signatures on contracts, or get your executives to sign off on projects and proposals, you can do so with Box Sign.
Since Box Sign is a native part of the Content Cloud, you can use it with every other aspect of Box. It's just another step in the process of managing your content. First, you can create, share, and collaborate on content in Box, then you can collect the needed signatures, and finally, you can secure and archive the signed content in Box.
Take a closer look at how Box Sign works:
Connects to workflows
Do you use Google Workspace, Microsoft 365, or other productivity suites? You can use Box Sign with the apps and products your company prefers. The Content Cloud integrates with more than 1,500 apps, from Microsoft 365 to Google Docs and Salesforce to Okta. Using Box Sign with your apps of choice means you can close deals faster, get contracts signed sooner, and generally speed up your business processes. App integrations also let your team work from anywhere in the world, efficiently and simply.
Embeds into apps
Box Sign isn't just for e-signatures executed in Box. You can also embed it into your company's apps and websites so customers and others can send and sign agreements right from where they normally work. For example, a lender embeds Box Sign into its website. A person applying for a loan could fill out the form directly on the lender's website and sign it right there, moving the application to the approval process quickly.
You don't have to be a tech whiz to take advantage of our APIs, either. We've designed them to be easy to use. Box Sign also offers developer tools that make it a breeze to add e-signatures anywhere your company needs them.
Ensures security and compliance
Whether you need signatures on confidential documents or have content that needs to meet certain compliance regulations, you can rest assured the Content Cloud keeps your information secure and compliant. Box is the only content platform available that also lets you collect compliant and secure signatures.
Some of the ways Box Sign protects your content include:
- AES 256-bit encryption
- Granular user permissions
- Simplified governance and compliance
- Complete audit trails
Learn more about Box Sign
Today's businesses rely on content more than ever before. You need a way to securely, quickly, and easily access that content. With the Content Cloud, you get a secure platform that allows you to manage content at all stages of its lifecycle. With the introduction of Box Sign, the Content Cloud offers yet another way to streamline your organization’s content management processes.
Box Sign will be part of all our Business and Enterprise plans and inherits Box’s security, compliance, and data governance profile, including HIPAA, SOC, ISO, and FedRAMP. Whether your business is large or small, Box Sign and the rest of the Content Cloud can help support your content needs. Contact us to set up a demo to see Box Sign in action and find out how it can help your company.