The procurement process tends to involve many contracts and other important documents. These documents require signatures, and obtaining those can become costly and time-consuming. It also uses up a considerable amount of paper. Over half of organizations still use paper documents for contracts and order forms. Moreover, if you have a global supply chain, many of those organizations are in different parts of the world, requiring important documents to be flown around the globe and back again. Not only does this become a significant expense, but it also opens the document signing process to additional risk, as items can be lost or damaged in the process. It can also make it difficult to handle time-sensitive business. Digital signature can solve all such problems in the following way:
A different type of signature
Digital signatures and e-signatures both offer a solution to these problems. They allow documents to be signed legally without paper being mailed or participants traveling to another location. There are drawbacks, however. These types of signatures are not treated equally around the world. Different countries have different laws around their use, and what is acceptable in one may not be up to par in another. Additionally, not every organization or individual is willing to take on the risk of using them over a physical signature.
These issues mean that digital and e-signatures are not appropriate for every situation. Despite this, they can still be extremely useful. It is necessary to determine in which contexts they should be used and which situations require physical signatures, but even using them only for low-risk, routine agreements can significantly cut down on time and costs.
However, what exactly are digital signatures and e-signatures, and what is the difference between the two? Many people will use these terms interchangeably, but they are two very different things.
Digital signatures versus e-signatures
An e-signature is essentially a digital version of a physical signature, although it could be some other type of mark or even a sound file rather than simply a digitally drawn representation of the signer’s name. It is the electronic equivalent of signing one’s name on a physical piece of paper.
A digital signature, on the other hand, is electronic data embedded into a document that verifies an individual’s identity. Using a digital signature is effectively like adding a notarized signature to a paper document. The individual’s digital certificate is combined with the document to create a unique set of data. This method of signing has a high level of security and will show any tampering that is attempted after the fact. There are several different types of digital signature, and they may appear as a ribbon at the top of the document, a stamp, or a signature line. Alternatively, the digital signature may provide the requisite data and security without including a visible mark within the document.
While digital signatures are very secure and comply with the security regulations of many countries, they are not always considered legally binding in the same way that a physical signature is. In contrast, e-signatures are more often accepted in legal contexts but do not have the same robust certification as digital signatures. Because of this, it is sometimes advisable to include both types of signature on a document, especially if it is one of high importance.
The best way to implement digital or e-signatures will vary from company to company. Organizations with a low tolerance for risk may only want to use them for low-risk documents. Those operating internationally should familiarize themselves with the laws and regulations in the countries in which they are doing business, and be aware of which ones do not support this type of documentation. It is also important to consider the risk tolerance and preferences of the other parties signing the documents — sometimes it will be necessary to use physical signatures to satisfy everyone involved.
With the right research and implementation, these types of signatures can streamline business operations and result in significant savings. It is important to set up processes and rules for when and how digital signatures and e-signatures are used, but once this framework is in place, it can help smooth away many procurement challenges.
To know more on how digital signature and e-signature can streamline procurement, digital signature software, digital certificate, and digital signature algorithm: