What Is an E-signature? How It Changes Business Transactions

The proliferation of software throughout our working lives has transformed some of the most basic elements of business conduct.

The concept of the signature has been one of the most enduring elements of the modern world, acting as a cornerstone of legally binding negotiations and business deals since the 17th century.

However, as technology and software have come to shape the modern working world, the methods behind this age-old business practice have been forced to change, leading to the adoption of e-signature software. Even if the meaning has remained largely the same, the form has taken on a greater importance than ever before.

The advent of this ‘digital transformation’ has affected nearly every aspect of business. From customer-facing roles such as sales and marketing to in-house departments like HR and accounting, as well as apps to help make the work-from-home experience as seamless as possible, the gains in efficiency brought about by digitizing formerly manual processes have led to increased returns on investment across the board.

Signatures are so central to business conduct that it only makes sense that e-signatures have become the basis for this new expression of human activity.

According to the United States’ ESIGN Act, an electronic signature can be defined as “an electronic sound, symbol, or process attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record.”

An electronic signature is a type of digital marker that formally captures the signer's intent to accept the terms and conditions of the contract or deal they are agreeing to. This allows for easier record-keeping when tracking the intent of individuals in business dealings and other legal proceedings, a core element of the growing trend toward the adoption of paperless offices.

How are e-signatures used?

E-signatures are just one of many remote software solutions that streamline business operations. They can be used for almost any circumstance where a signature is required.

However, there are a few areas where utilizing an e-signature can become particularly useful.

Legal contracts

When it comes to the law, a signature is probably the most useful tool in your arsenal. Unfortunately, many legal processes can be nothing short of ponderous and difficult to navigate at the best of times.

The last thing you want is the lengthy process of sending out documents for a manual signature and then waiting for them to be returned by mail. And heaven help you if they forget to sign a crucial page or two.

E-signatures can help avoid these complications by sending all documents with the relevant forms at the click of a button. Keeping things moving in the legal sector is vitally important for any business to be conducted, so making it as painless as possible should be a top priority for your business operations teams.

Human resources

Human resource departments have a somewhat unique role in any company. They have to work with the law nearly as much as the legal departments themselves, yet their focus is entirely internal, focused on the employees themselves.

When it comes to conducting a smooth human resources operation, you want to ensure that everyone has the information they need and can agree to all the necessary things that keep an organization running smoothly.

This can include sending offer letters to new hiring prospects, offboarding employees who are leaving the company, and supporting diversity and inclusion laws and initiatives to help ensure a positive, healthy work environment.

Sales

Making sure the selling process is as smooth and easy as possible for your prospects is one of the most important things that a salesperson can offer.

For most of the sales pipeline, this involves easily accessible content, responsive and respectful representatives, and complete transparency regarding the company’s product or service.

However, all that hard work could go to waste if the actual process of signing a contract hits a logistical snag. Eliminating work on behalf of your prospect when it comes to signing the document that will legally bind both you and them can work wonders to reduce frustration and ensure a positive experience for the client, which can eventually grow into a healthy, loyal professional relationship down the line.

Finances

The world of finance requires countless signatures in order to work effectively. Want to take out a loan to start or expand your business? Need to file an insurance claim?

Both will require signatures from your finance team. Make sure this process is as quick as possible so you can quickly get back to business as usual.

Difference between e-signatures and digital signatures

While e-signatures and digital signatures might seem to be the same thing at first glance, they are two different parts of the overall process that allow online signatures to function.

A digital signature is related to cryptography, the craft of creating and solving codes. While an e-signature might simply be a few words typed into a box, a digital signature uses complex mathematical algorithms to generate a unique digital fingerprint for each document.

This allows for the identification and validation of signatures made by the signee. After all, anyone can type a name into a box.

It’s crucial to ensure that safeguards are in place to prevent the tampering or fabrication of online signatures to ensure that e-signatures are valid representations of the signee's intent.

This process of encryption uses the public key infrastructure (PKI) system to generate two sets of “keys”: one private and one public. Signing the online document provides the public key to the recipient while encoding the private key into the document itself.

When the signature is verified, the recipient can use the public key to decrypt and view the document. If the public and private keys don’t match, the document will remain locked.

How to do online signatures

There are a few different ways to approach creating your online signature.
Like your handwriting, everyone’s signature is somewhat unique, and that doesn’t change just because the form or document is being signed over the Internet instead of in person.

While the format does depend on the software that’s being used, there are a few common methods for creating an online signature that you’ll probably run into more often than not:

• Use a keyboard to type your signature. This is by far the most basic form of online signature. Simply click on the appropriate box and type your name like you would in a word processor. Don’t worry; the encryption tools in the software will help ensure its authenticity.
• Use a stylus or a finger to draw your signature. This is a great option for recreating the feel of a traditional written signature; however, it requires a touch screen. Luckily, this is a built-in function for many e-signature tools that are compatible with phones or tablets.
• Use your mouse or trackpad to draw your signature. If you don’t have access to a touch screen, you can use your cursor to draw your signature, much like how you would with a stylus. While not as accurate, it will still work just as well.
• Upload an image of your written signature. If you really want to go for authenticity, you can write out your handwritten signature and either scan it or take a picture of it to use as your online signature. It’s fairly simple to do; just upload it to your computer like you would any other image, and place it in the appropriate document space on the form you’re signing. Note that not all e-signature software will support this option.

Benefits of electronic signatures

While it might seem that something as simple as an electronic signature is not a vital element of cutting-edge business operations, the integration of software into most aspects of life has given rise to the trend of putting control in the hands of the consumer.

Putting convenience and quality of life first will pay huge dividends when it comes to funneling your prospects through your sales pipeline and retaining customers. Also, integrating e-signature seamlessly with legal practice management solutions can help streamline workflows and manage legal documents more efficiently. 

Below are just a few of the benefits that adopting electronic signatures into your business operations can have for your organization.

Cost-effective

Electronic signature software is by far the most affordable option for documenting intent. Not only do you save money on paper, but you also save on postage, mailing, and supplies, which can cost a large amount of money over time.

Environmentally friendly

By reducing the amount of paper you use, you can help stop contributing to the massive amounts of waste produced by the paper industry. Around 400 million tons of paper and cardboard are produced worldwide every year, and this is one of the leading factors in the destruction of the natural world.

Easier version control

One of the most important elements of any form of signature is the ability to provide a detailed, up-to-date record of the signee's intent.

Unfortunately, human error is all too easy to introduce and muddle the waters when it comes to traditional paper signature methods. This can be disastrous when it comes to important legal or business dealings, causing setbacks, fines, or even legal action should the appropriate signature be lost.

E-signatures leave nothing to chance as they automatically update and store the information of whatever document you use in an easily accessible digital storage space. Using e-signature software will make sure that you have all the signatures you need when you need them.

Better user experience

The advent of the digital transformation of the early 21st century has transferred a lot more influence to the individuals who make up a given company or industry’s consumer base.

Instead of the “market” as a broad concept, the most effective way to conduct marketing, sales, and business operations has undergone a fundamental flip, requiring a tailored approach to individuals instead of large swathes of the population.

E-signature software helps ensure this through ease of use, eliminating the hassle involved with remote signatures and having to rely on mountains of documents, where important information can easily be lost.

Secure

One of the unfortunate realities of the move to digital offices and operations has become the increased opportunities for security breaches and hacking.

While this could potentially pose a problem when collecting an online signature, most official e-signature software comes equipped with a high level of security that helps keep your and your client’s information safe. In fact, it’s even being used in industries such as banking to help protect money and sensitive financial information.

Efficient

It goes without saying, but technology is far more efficient than any human could ever hope to be.

E-signatures harness this efficiency by allowing remote signatures to be completed in just a few seconds. Additionally, they make scaling signature collections across an organization or client base easier than ever.

Common myths and misconceptions about e-signatures

Despite the growing adoption, several myths surround e-signatures, hindering their wider acceptance. Let’s dispel some of these common misconceptions.

• Myth: E-signatures aren’t legally binding.
  Reality: E-signatures are legally binding in many countries, including the United States under the ESIGN Act and in the European Union under eIDAS. The legal framework ensures the same authenticity and integrity as traditional wet signatures.
• Myth: E-signatures can be easily forged.
  Reality: With advanced encryption and authentication measures, e-signatures can be more secure than traditional signatures. Audit trails and verification processes add layers of security, making forgery extremely difficult.
• Myth: E-signatures are complex to implement.
  Reality: Modern e-signature solutions are designed to be user-friendly. They integrate seamlessly with existing business processes and require minimal technical expertise to implement.

Best e-signature software

It won’t take long for you to figure out that there are numerous options when it comes to selecting the e-signature software that will help your organization’s adoption of a virtual office model. That’s why it’s important to take careful stock of your business’s distinct needs so that you can provide the best experience possible to your consumers.

To qualify for this category, a product must:

• Allow sender and recipient to sign documents on a variety of devices and operating systems
• Encrypt and secure communications and shared documents between users 
• Track document status and notify users when actions are required (sign, approve, etc.)
• Enable users to define user roles and permission rights internally and for external users (contractors, partners, customers, etc.)
• Offer built-document creation and storage capabilities or integrate with third-party software solutions that provide document creation or storage features

Below are the 5 leading e-signature software from G2’s Summer 2024 Grid® Report. Some reviews may be edited for clarity. 

1. DocuSign

DocuSign helps organizations connect and automate the various ways in which they need to manage legal agreements. As one of the leaders in the e-signature space, their solution allows for the easy tracking and archiving of business information and helps to deliver a smooth experience anywhere in the world.

What users like:

“It is intuitive in prefilling signature fields. I like the convenience of just checking and emailing to clients for signatures. The fact that it is secure puts my clients and myself at ease. I also like the ability to go to the DocuSign website and find all the documents I've sent through or signed are available for downloading.”

- DocuSign Review, Jonathan W.

What users dislike:

“The only thing I dislike is that sometimes the security questions for clients can be very obscure. The questions are generated from LexisNexis, so i know DocuSign does not have much of a say in what questions a client might get.”

- DocuSign Review, Mariam H.

2. Adobe Acrobat

Adobe Acrobat excels as an e-signature solution with features for creating, editing, and signing PDFs. It provides advanced security, customizable forms, and automated workflows, ensuring document integrity and compliance. Its integration with Adobe’s cloud services and other products enhances productivity and ease of use.

What users like:

“I like that I am able to create editable PDFs. This is a huge requirement in our business as a large portion of our demographic is above 50 and prefer to place their order on either a physical or digital form where they fill in their details as opposed to placing it directly via our website.”

- Adobe Acrobat Review by Parisa H.

What users dislike:

“There are some functionalities and shortcuts that aren't standard and cause some problems when you are used to adopting different tools from within and without the Adobe CC Suite.”

- Adobe Acrobat Review by Pietro V.

3. PandaDoc

PandaDoc’s all-in-one document automation software streamlines the process of creating, approving, and eSigning proposals, quotes, and contracts. When you integrate your existing CRM, payment, and file storage apps into a single workflow, PandaDoc helps you simplify processes and increase efficiency across the entire organization.

What users like: 

“What I like best about PandaDoc is the integration with SalesForce. I also like how fast it speeds up deals. Having customers able to use PandaDoc instead of mailing papers back and forth is a game-changer. I also saw the recent Panda update that shows the new features and updates that they are working on and have pushed out to the public. Having clarity and transparency to the users is huge and really nice to see.”

- PandaDoc Review, Kidder S.

What users dislike:

 “I'm excited for updates based on the field integration, especially as it pertains to something like Pipedrive, which pulls the info from Pipedrive into PandaDoc- some of the fields don't always match up, which does mean I am manually entering address info, just because it's named differently on Pipedrive as opposed to Pandadoc. The customer support is amazing, however!”

- PandaDoc Review, by Ruth O.

4. Jotform Sign

JotForm Sign offers a powerful e-signature solution focused on ease of use and efficiency. Key features include customizable templates, secure document storage, and seamless integration with various applications. Its advanced automation and compliance tools streamline the signing process, making it ideal for businesses seeking a reliable and user-friendly platform.

What users like:

“I like this tool because if offers many features and I like the ease of use, the intuitive interface and the templates they offer, plus they can be customized and adapted to my needs, it is also easy to configure and it is convenient and saves a lot of time.”

- Jotform Sign Review, by Christian C.

What users dislike:

“The biggest downside has been some of the bugs that pop up on the website every now and again. By that, I mean from time to time when I go to preview a form I have worked on, certain form elements will be in a different order than I put them or be missing, or be duplicated. It has forced me to go back and "fix" these issues numerous times.”

- Jotform Sign Review, Chris D.

5. Dropbox Sign (formerly HelloSign)

Dropbox Sign (formerly HelloSign) provides a streamlined e-signature experience with features such as intuitive document signing, advanced security, and integration with popular applications. Its user-friendly interface and robust compliance tools make it a strong choice for efficient and secure document management.

What users like:

“I love the ease of use; It is very easy to upload my document and set up all the different things needed for signatures, initials, text fields, and checkboxes that we use all the time.”

- Dropbox Sign (formerly HelloSign) Review, David S.

What users dislike: 

"The only thing I dislike about Droprox Sign is you can't change the variables once you've sent the item out for signature. Sometimes, we'll get a customer who wants to omit a middle name or add an initial, and instead of fixing it, we have to scrap the whole thing and start over. It's no big deal, but if you're dealing with a customer who's already a pain, having to re-do their contract might make you grumpy for a minute.”

- Dropbox Sign (formerly HelloSign) Review, Cynthia M.

Signing off

Regardless of the industry in which you operate, finding a way to transition your office operations to a digital format will save time, money, and hassle in the long run. E-signature software offers a comprehensive and secure way to conduct business and legal deals without any of the fuss of traditional pen-and-paper methods.

Stay cautious and keep your digital security levels high by learning how to protect yourself online.

This article was originally published in 2020. It has been updated with new information.