Digital Signatures: An Important Part of a Comprehensive Contract Management Software
Organizations that understand the vital importance of contract management are increasingly making the decision to use contract management software, which can significantly increase the efficiency of the contracting process. And a critical aspect of any contract management software system is its capability for digital signatures, which use asymmetric cryptography technology to authenticate that a signature was created by the person sending the message and that it wasn’t altered once it was sent.
With a digital signature, the sender can’t dispute the signature if a dispute arises. This guarantee of authenticity and non-repudiation is essential in allowing contract completion to feasibly occur electronically.
Faster Is Better
But digital signature capture isn’t just for validation that a signature is legit, it also allows contracts to be closed much more quickly – meaning that organizations can begin to take advantage of the benefits of contracts sooner than with paper-based systems.
This increased speed is largely due to the elimination of time-consuming shipping, but is also derives from working to eliminate loss of focus. The parties in a contract may be ready to sign, but if one of the parties has to wait for the contract to be shipped for his or her signature, they may have moved on to other priorities, leaving the contract completion stalled until their focus on it returns.
And with digital signature capability, there is also an increased closure rate because delays in contract closing provide a window for a customer, vendor, or other business to change its mind about entering into the contract. When it comes to closing contracts, time is an enemy.
The improvement in contract processing time can be dramatic. For example, Aetna – the Fortune 100 health insurer – reports that recently acquired digital signature capability enabled the company to reduce contract processing time from three weeks to one day on average. That’s the type of efficiency improvement that can be expected using digital signature technology as part of a contract management software solution.
Real-time Closing Promotes Business Relationships
It may not seem that important, but there’s a psychological satisfaction in two parties agreeing on a contract and actually completing it immediately after agreement is reached, rather than weeks later after the parties have moved on to other business. There can be a sense of mutual accomplishment at these moments which helps the parties build mutual trust and collaborative feeling- and that leads to ongoing profitable relationships.
Other Benefits Add Value
With digital verification, falsified signatures are no worry. Neither are signatures that are improperly signed (e.g., wrong date, in the wrong place, etc.).
Digital signature capturing also means that signees don’t have to manually sign multiple contract copies, which not only increases speed, but frees signees up for more value-added activities than simply signing their names.
And digital signatures within the contract management system can be much more easily retrieved-even years later-than paper documents stored away in file cabinets in back rooms.
Digital Signing Is Part of Strategic Move Away from Paper and In-House Management
An obvious benefit of digital signatures relates closely to the overall benefit of any contract management software system – it reduces paper, shipping, and storage costs, while at the same time increasing reliability and ease of processing. The move from paper to digital is one that all organizations should be making.
Digital signing is also at the forefront of the move by organizations toward outsourcing their contract management. The advent of cloud-based Software-as-a-Service (SaaS) options has made outsourcing contract management an affordable, effective option for organizations of all sizes, and, according to a report by Gartner, “SaaS-based offerings will be used for 80% of all new North American e-signature purchases by 2013, compared with 15% in 2009.”
Digital Signatures and the Bottom Line
Of course, organizations aren’t concerned about being part of any technological innovation just for the sake of being on the “cutting edge.” As the Gartner report concluded, when implementing digital signature technology, “The goals are to enable more-rapid business process execution and to reduce costs.”
Unquestionably, digital signatures as part of a comprehensive contract management software system can achieve those goals, leading to increased profitability. If you’re not already using digital signatures as part of a comprehensive contract management software system, you should seriously investigate the enormous potential of this solution.