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E-sign on the dotted line [Credit Management (UK)](Credit Management (UK) Via Acquire Media NewsEdge) Oily Culberhouse explains the benefits for businesses of using electronic signatures. THE use of electronic signatures is not new, but in recent times the need to improve traditional paper-based transactions has increased. Since the Electronic Communications Act was passed in 2000, a good many solutions have come to market, mostly from the US, but with an increasing number of providers launching in the UK. The Gartner Survey of May 2012 states: The overall market for e-signature software and services grew from a revised estimate of $111 million in 2010 to $164 million in 2011 - a 48 percent compound annual growth rate'. The survey also showed that 43 percent of banks not using e-signature today are 'interested to extremely interested' in using it for commercial loan origination during the next two to three years. So the interest in electronic signatures appears to be high. The challenge, is how they can be best deployed. Where do I sign? The true definition of the word signature is 'a mark or sign made by an individual on an instrument or document to signify knowledge, approval, acceptance, or obligation'. However, in order for a signature to be legally valid it is not essential that it is actually in a written format. Society has generally understood that a signature needs to be a visual representation of your name written by your own hand - a 'wet signature'; and before we could read or write an X or dot was a perfectly good example of such a mark. But with the ever-evolving world of technology other types of signature are now acceptable. Scanning and uploading your signature written on a piece of paper is also a valid signature. It's technically an image but when attached to a document or email qualifies as a signature. This is popularly used in marketing, for example on direct mail letters where it looks more personal if signed, but impractical to sign tens of thousands of pieces of paper. A Biodynamic signature is also common practice when signing for post. The handheld device offered with a stylus qualifies as a signature. It may not be using pen or paper, yet it is recording the action of the recipient on the screen and attaching it to a digital receipt or database for tracking purposes. This could also be generated through using your mouse or, more recently, your finger on tablet devices to create your electronic signature and is saved as an image. In many instances the name or department on an email address (as long as allocated to an individual), also serves to identify the person making the decision and is considered to be another form of signature. A Personal Identification Number (PIN) is also a form of 'electronic' signature and is widely accepted as an authorisation, so too the 'click wrap' method of agreement. Clicking the 'I accept' or 'I agree' button on a web page - particularly when it comes to software - is proof of your intent. Why have we adopted using a 'signature'? Principally it is to allow an individual to agree to terms contained within a document he/she is 'signing' and to authenticate that the signature is genuinely from that individual. What is an 'e-signature?' An electronic signature's true definition is a 'symbol or symbols or other data in digital form attached to an electronically transmitted document as verification of the sender's intent to sign the document'. This can be as simple as a typed name or digital image of a signature written by hand and includes an ability to track the signatory through a unique identifiable link, which allows the signatory sole control of signing the document Digital by definition means 'a digital code (generated and authenticated by public key encryption) which is attached to an electronically transmitted document to verify its contents and the sender's identity'. These are usually more complex and used at the top end of security measures, mainly with data handling. Generally a generated digital code is used to authenticate the user/recipient and prevents tampering etc through encryption techniques and algorithms. So what are the benefits? Easy to authenticate - by providing a unique URL to the user, which is activated only by the named individual in an email address - this is much easier and more secure than having to compare handwritten examples for comparison which online are not often available. Unable to be copied or altered - a handwritten signature can be copied and traced leading to forgery, yet through electronic signing it is bound only to that one item, in that instance, on that link; as part of a multi-stage tracked process. Therefore it cannot be transferred to another instance and is evidenced against a time and date stamp process. Applicable to whole document - by protecting the document as a whole entity the signature is applied to a fixed item, therefore any changes made to individual pages after the signature has been made would be noted and shown as a new uncertified document - reducing the risk of errors. Acts as a witness - with each individual step of the journey being tracked, it is possible for the software to act as a witness for identifying the recipient through other verified means through passwords etc and the same document can be forwarded to multiple recipients to save time and act as a secondary approval stage. Who uses them? Any individual, business or organisation that requires confirmation or approval of documents between two or more parties can use electronic signatures. Examples of industries in which electronic signatures have been widely adopted are: property for tenancy agreements, inventories; finance for terms of business, annual report filing, loan agreements; telecoms for contract applications; utilities for customer service liaison, sales proposals; recruitment for employment contracts, performance reviews, training attendance; and corporate for purchase orders, supplier contracts. Choosing the right one? There are several things you should bear in mind if looking to adopt this process in your business. Yes it can and will save you both time and money, but only if you adopt the right approach. Firstly, understand your legal needs. Make sure the provider ticks all the relevant security measures as set out by EU directives both digitally in terms of storage and encryption - but also in terms of tracking and authenticating. Choose the right price structure for your usage and be sure to know your limits. There are many types of package, so be clear on how many documents you'll be sending and choose a package that fits. Options include a pay as you go basis, a monthly subscription or a customised price plan. Many providers offer other services as part of their sign-up so be sure to check you're not paying for something you won't use. Visually and technically you need to be able to easily upload your documents and add the relevant data - likewise your customer needs to be clear on what to do when they receive it to sign it. Ease of use is therefore essential. You shouldn't need to be technically minded to be able to follow the instructions and move on; it is a time saving investment after all. Check with your IT department that the provider you choose integrates easily with your existing systems. This is where a standalone online service can be beneficial as you won't need to upgrade or incur any other costs to use the service. And finally, always ensure you have technical support you need for those rare occasions when you need to check, authenticate or confirm details within your submitted documents. However in order for a signature to be legally valid it is not essential that it actually is in a written format Oily Culberhouse is Owner and Founder of Signable. (c) 2014 Institute of Credit Management Ltd. |