The 3 Main Benefits of Using Electronic Signatures
An effective contract management system should include the ability to support electronic signatures. The three main benefits of using electronic signatures include increased contract speed, enhanced security, and lower transaction costs.
Editors Note: To learn more, download this whitepaper on contract management best practices.
What is an Electronic Signature?
An electronic signature refers to a process of attaching an encoded signature to an electronic document. Electronic signatures are legally binding based on the U.S. Electronic Signatures in Global and National Commerce Act (E-SIGN), enacted by Congress in 2000. No longer are companies tied to paper to execute contracts and the resulting process improvement and cost savings can be substantial.
What Exactly are the Benefits?
Before electronic signatures were legally recognized, all contracts had to be signed, shipped, faxed, or scanned, and filed. Obviously, this process requires multiple steps making it time consuming, costly, and should be avoided whenever possible in favor of electronic signatures.
Benefit #1: Increased Contract Speed
Consider, for example, how a healthcare provider with contract management software can use electronic signatures to speed the execution of time-sensitive contracts that critically affect patient care. Electronic signing can prevent any unnecessary delays in finalizing contracts resulting in improved performance. Healthcare professionals – like professionals in almost any field – have enough to worry about without having to wait for paperwork to be shuttled around for signatures before a needed contract is put in place.
There are numerous ways electronic signatures can streamline and accelerate the contract process, including:
- A digital signature is good for the life of the contract, doing away with repetitive signing.
- Negotiations can be accelerated because each step in the process is authenticated and easily accessed by all parties, so critical issues can be flagged and tracked until final execution.
- Even if the parties are geographically diverse, signatures are done electronically so there is no delay in updating or executing contracts.
Benefit #2: Enhanced Security
Another advantage of electronic signatures is that there is less worry about security than with paper, which can easily be tampered with. Contract management software with electronic signing capability can automatically detect even minor altering and record more data points than paper.
Benefit #3: Lower Transaction Cost
In addition to the previously discussed cost savings, the automated processes of electronic signing can reduce the financial impact of human error such as signing mistakes, which can slow down the process or cause eventual costly problems if initially undetected. Electronic signing software can help mitigate risks by providing alerts about suspicious records or compliance issues involved with a contract. Electronic signatures ensure everything is in order, saving the cost of fixing problems that could have been prevented.
And don’t forget the obvious savings on items such as paper, copying, packaging, and shipping. These costs may seem minimal, but they add up.
Across the board, in terms of labor, material costs, and efficiency, electronic signatures save money.
One of the many advantages of using contract management software is electronic signatures. Key benefits of electronic signatures include increased contract speed, enhanced security, and lower transaction cost.