Document Signing Doesn't Have to be a Hassle Here’s Why

We are here to inform you of the details about e-signatures and best kept practices, as well as the reasons why you should leave behind normal handwritten signatures.
Blair Chenault
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It’s time to start the conversation about electronic signatures. You’re probably still signing all your contracts, lien waivers, payment applications, and other important documents by hand, but who blames you? How are you supposed to know that there are alternatives out there that are growing in popularity and are just as legally binding as a pen to paper signatures with a notary? Look no further to find out your options. We are here to inform you of the details about e-signatures and best kept practices, as well as the reasons why you should leave behind normal handwritten signatures. According to the Federal Deposit Insurance Corporation (FDIC), the E-sign act “allows the use of electronic records to satisfy any statute, regulation, or rule of law requiring that such information be provided in writing if the consumer has affirmatively consented to such use and has not withdrawn such consent.” So, in simple terms, this groundbreaking law which was passed in June of 2000 by President Bill Clinton granted e-signatures the same status as a written signature.

What does this mean?

This means e-signatures are legal in all 50 states where federal law applies, but don’t just go typing your name on a document, and call it signed. We recommend you read more to understand the various requirements associated with e-signatures in order to make them valid.

Here are the five factors that make an electronic signature legally binding. They are:

1. Intent to Sign

An e-signature, like a traditional paper-based signature, requires each party to intend to sign, in order for that signature to be valid. An indicator for this could include a checkbox asking if you agree or wish to continue in signing the document.

2. Consent to Do Business Electronically

In addition, it is critical that the parties agree to do business online. Often times before signing, you will be asked if you are certain in doing electronic business. A sure-tell sign of this might be a box where you click yes or no.

3. Authentication

Furthermore, in order to validate an electronic signature, you need to make sure the person signing is indeed the person whose signature is being placed on a document. So traditionally on paper this is done using a notary, but for e-signatures there are other options. These could be a unique user pin, password, multi-factor authentication, emailing a secure link or other security questions similar to how a bank identifies your identity over the phone. It is also important to establish attribution to the individual who signed the document. This is commonly recorded in an audit trail that can be traced back to original signee.

4. Security

It is also paramount that the signature is binding and secure to the document and there is proof of non-alterability after the signature has been placed on an electronic document.

5. Record Retention

After signing, you need a record of the contract, who signed it and how they signed it. Digital signature software will provide you with the option to save your copy or it will be saved in a place that is easily accessible to the signee.The following best practices are based on legal framework for the use of electronic signatures set out by the Uniform Electronic Transactions ACT (UETA). This legal framework for electronic signature validity has been adopted by all 50 states excluding Illinois, New York and Washington. These states have implemented their own statues relating to e-signatures, so we recommend if you do business in these states that you contact an attorney to get more details.

Do E-signatures Stand Up In A Court of Law

Taking it to Court

Can electronic signatures uphold in court?

In 2011, “the Supreme Court of Arkansas affirmed the lower court’s judgment in favor of GEICO, upholding the applicability of the Uniform Electronic Transitions Act (“UETA”) to a waiver of minimum medical coverage.” A woman waived for minimal medical coverage during an online application for GEICO. After a car accident, she sued GEICO claiming that her signature was not “in writing,” because the signature was done electronically. The Court noted that her signature had the five factors for a binding electronic signature and sided with GEICO.

Tying it in to the Construction Industry

Like we discussed earlier, most contractors are still using paper and pen to sign contracts, lien waivers, payment applications, and many other important documents. This is slowing down the document exchange process drastically. In turn, when documents are exchanged slowly, your project will emulate that slowness. Construction firms are always looking for ways to streamline their businesses and building processes. When they can streamline a process, it makes everything more efficient resulting in higher quality results in finished projects and bigger bottom lines. However, the aspect that most construction companies do not consider is the document exchange and paperbound signature process that the industry is currently entrenched in is a major inefficiency. A few brave souls have begun transitioning to electronic signatures and have had extreme success with the switch. Certain construction software companies ranging from construction management software to construction pre-construction software and construction payment software have started to adopt electronic signatures into their platforms.

Construction professional reviewing and signing a document virtually

Why Electronic Signatures Matter

It is safe & trackable

For one, it is much more secure and safe to digitally sign documents rather than signing with pen and paper. Your signature is protected at the point of signing. Let’s walk through the process of this.When you sign digitally, there is

  • Graphical representation of your signature
  • Location you signed from
  • Timestamp in which you signed
  • Authentication of your signature

Whereas with pen and paper signing, these actions are not tracked. If you do want to track them, you can bring in a notary. But if you can bypass this with digital signatures, why not capitalize on it? Did you know that notaries are only required in three states (Mississippi, Texas and Wyoming)? Unless you are in one of these states, you have the option to bypass notarizing documents. Electronic signatures take out the middle man and allow for you to effectively sign off on a document.

Electronic signatures help save time

Another way that electronic signatures makes everything simpler is by saving time. Think about when you are at the urgent care and all you want to do is be seen by a doctor. You get there and have to sign pages and pages of information. The time this takes is frustrating, but what if this could be expedited with digital signing? SecuredSigning released a case study documenting the time efficiency of digital signatures for its client, PeopleBank. According to the findings, digitalizing the signature process saved employees an hour and a half per employee’s on-boarding process as opposed to the traditional pen and paper process. Take a look at the breakdown of this case study.

  • The main idea was to simplify the on-boarding process for general contractors. To do this, they had to identify what was inhibiting them from a speedy process.
  • Secured Signing proposed the idea of “eStarter and eContracts that streamline processes related to contract preparations including sensitive contact information (Tax File Numbers), ABN & PAYG information and management of the signing processes required
  • Secured Signing’s “Personalised X509 PKI Digital Signature technology” helped PeopleBank to manage its on-boarding process in a secure an efficient manner
  • PeopleBank’s staff now uses this software for contract and signing processes and it has cut down the process by 1.5 hours for each employee
You Can Save Money

In addition to saving time, you can save money by electronically signing. While it might not seem like a steep cost, factors such as buying paper, ink, administration and shipping come into play. By going paperless, you do not have to worry about these small but additive costs. Furthermore, using electronic signatures automatically creates a digitally copy of the signed document that can saved and easily accessible. There are contract disputes all the time in the world of business and hunting down the most updated version with your signature can be a hassle or worst can lose your company huge amounts of money if you can’t find a paper copy of the contract. Remove this risk out your business practices by signing documents electronically and having them stored securely in one accessible location. Finally, with electronic signing, it is more convenient for yourself and everyone around you. You can expect a faster turnaround on necessary documents. The process has been made simpler so that you can focus on your own priorities and not the hassle of faxing and copying signed documents. The E-sign Act has immensely aided in making document signing better for everyone. With higher security, putting more time and money into your pockets and making it convenient for you, why not go this route? There is plenty of software out there that specializes in electronic signing such as Adobe Sign, DocuSign, or SignEasy.

What Should You Do Next?

The convenience of being able to sit down and knock out a task without having to print off a document, sign it, scan it and email it, has truly revolutionized how the industry is doing business. Construction payment management software has been on the leading edge of incorporating this technology. It’s time that we throw away the filing cabinets and put up our pens. The future of business is moving in a digital direction and away from paper and pen signatures. Book a demo with Flashtract today and begin the first steps of becoming truly paperless.

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