Digital signing makes digital contract management complete
The topic of digital signing has been present for years, but was not declared Priority 1 in many companies before the pandemic. The last two years have driven digitization in companies strongly. The focus was on digital collaboration among colleagues and with customers and thus the retention of the ability to work despite contact restrictions and home office. For this reason, digital signatures and contracts are now a crucial factor in digital collaboration.
In addition, there is the media discussion on the subject of paper shortages, which increasingly draws attention to paperless processes. Digitized processes can be the answer not only to declining paper production and sharply increased paper prices, but also to questions of sustainability and resource conservation. Because it is neither ecological nor economical to send and sign documents in paper form back and forth. An example:
A company with 250 employees consumes about 195,000 sheets of DIN A4 paper per year (source: docusign.de). With the thickness of a sheet of paper of about 0.1 mm, this results in a stack of paper almost 20 meters high, which corresponds approximately to the height of a tree.
The paper industry obtains about 8,500 sheets of A4 paper from one tree (source: watson.ch), which means that with 195,000 sheets of DIN A4 per year, almost 23 trees are consumed by this one company alone.
- 1. What expectations do customers have today?
- 2. How can I sign digitally?
- 2. When is a digital signature legally binding?
- 3. How does a digital signature work?
- 4. How secure are electronic signatures?
- 5. What are the benefits of digital signing and digital contract management?
- 6. Digital contract management in GEDYS IntraWare CRM
1. What expectations do customers have today?
The booming e-commerce is leading the way. When you order something online today, all documents relating to transactions up to the invoice are digitally entered in your e-mail inbox. A simple process without media discontinuity, which we also want for other contract processes. For medium-sized companies that sell more complex products and projects with extensive contracts, such an end-to-end process is rare.
In most cases, semi-digital processes are established in which contracts are written electronically, which switch as PDF by e-mail between the editors and finally arrive at the customer. If contract management software is used, digital contract templates and text modules are used. After that, the break usually takes place: The sent PDF is printed out and signed. The signed document is finally scanned again and returned as a newly created PDF and stored in the digital file of the application. Thus, the vision of a complete digital contract management is not fulfilled.
In addition, the scanned PDF as a copy does not offer any security in the sense of the obligation to provide proof. So the original must also be archived analogously. A major reason why contracts are still printed, signed and sent by post, nationally and internationally. This way of signing PDF, printing multiple times and sending it by post not only consumes a lot of time, but also a considerable budget and it harms our environment immensely. Why not process the process digitally to the end and also sign the contractdigitally?
2. How can I sign digitally?
After receiving a PDF, you open the document with one of the digital signing solutions and sign it online in real time, which provides it with a signing certificate and a time stamp and is therefore considered legally signed.
Making a digital signature legally valid in the PDF is therefore not magic, but the modern standard for both companies and private individuals.
Small difference: The terms digital signature and electronic signature are not identical in content!
2. When is a digital signature legally binding?
Anyone who thinks that scanning their own signature and inserting it into digital documents is still sufficient for everyday business is mistaken. The legislator specifies certain forms for contracts and their validity.
Guidelines on the subject of digital signing
Since June 2016, the elDAS Regulation (Electronic Identification And Trust Services for all EU member states and all additional states of the EEA) regulates the types of and the valid requirements for digital signing. The Regulation lays down the technical conditions for digital transactions and thus for digital signatures.
The eIDAS Regulation specifies 3 forms of digital signature:
- The simple electronic signature
- The advanced electronic signature
- The qualified electronic signature
Differences of the 3 signature forms
In short, the distinction relates to the level of security, the unforgeability of the validation process* and data, and the identity of the signatory.
(*Validation process = providing documented proof that a particular process continuously produces a product that meets the previously defined specifications and quality characteristics)
1. Simple electronic signature
It is the weakest and least secure form of digital signature and is therefore best suited for transactions with the least legal risk. Therefore, only a few requirements are placed on this type of digital signature. It serves, for example:
- identify the sender of a message. An example of this is a standard email signature that identifies the sender as a member of a company.
- to provide a document with a scanned signature (examples: You give a parcel carrier your signature on his scanning device or you use your self-scanned signature for informal agreements).
The electronic signature thus fulfills the same purpose as a handwritten signature on paper documents. There are different forms of electronic signature; however, even the simple electronic signature is usually legally binding. A prerequisite for their validity is the consent of all parties.
2. Advanced Electronic Signature (FES)
The requirements for advanced electronic signatures are higher. This type of digital signature makes it possible to check the authenticity of the signed data. The advanced electronic signature must:
- can be assigned to the signatory (authenticity),
- enable a clear identification of the signatory (non-repudiation),
- created by means under the sole control of the Signatory
(e.B. with your own PC or tablet)
- prove that the document has not been subsequently changed (integrity).
3. Qualified Electronic Signature (QES)
The qualified electronic signature largely corresponds to the handwritten signature on paper required by law. Qualified signed documents cannot be denied. In court, they are thus recognized as originals and can only be doubted by “justified facts”, similar to the handwritten signature.
When are digital signatures legally valid?
That depends entirely on what exactly is signed. Is it a form-free agreement that is not subject to strict legal requirements? Then the so-called advanced electronic signature (FES) is sufficient.
If, on the other hand, it is a document that necessarily requires the legitimate identity of the signatory , only the qualified electronic signature (QES) should be used, which holistically replaces the written form on paper. In this way, you can digitally sign every document and be sure that the digital signature made will be recognized in court .
However, there are currently still use cases that must continue to be handwritten, such as the termination of the employment relationship.
3. How does a digital signature work?
The Federal Network Agency recommends suitable methods for encryption. Every year, it publishes a list of minimum requirements for cryptographic algorithms and the generation of qualified electronic signatures. Digital signatures are usually created using public key cryptography , with each person having their own private key and public key pair.
Electronic signing – using the example of the Docu Sign solution
You will receive the document to be signed by e-mail, as a link to a Word or PDF file. By clicking on the link , the system automatically directs you to the places in the document where you have to sign the signature . Via the smartphone or tablet, signing is very easy with your finger on the touch screen, on the PC the name can be entered via the keyboard. The whole thing only takes a few seconds.
The decisive factor here is the prior verification of the user via his email address. It identifies the person as an authorized user and makes the signature legally valid.
If the security level is to be higher, the factors for authenticating users can be increased. A qualified electronic signature (QES) is made possible, for example, by a video identification procedure or by checking the IP address via which a document is accessed. As soon as the signatory confirms his signature, the system informs the creator of the contract. This has determined in advance who, when, at which points of the document a signature must be set. Thus, the application always knows exactly what to do in the next step and when a contract is considered released.
4. How secure are electronic signatures?
Digitally signing something means adding a signature or mark, or appending a unique identifier (ID) to it. The advantages of digital signatures over handwritten signatures include:
- They can be verified immediately.
- They cannot be faked.
- They can be easily shared over networks.
- They can be stored electronically
5. What are the benefits of digital signing and digital contract management?
We live in a globalized world in which companies from different countries and regions have to work together on a daily basis. In order to comply with supply or production chains, coordination must function as smoothly as if all actors were sitting at one table in one place , speaking the same language and subject to the same laws. Since this is not the case in reality, we need tools that help us to imitate this condition as much as possible.
This is where modern solutions for contract management, also known as contract lifecycle management , come into play. A contract can be sent to the next recipient for signature within seconds, whether that person is sitting just one room away or on a completely different continent.
For your customer contracts, the qualified digital signature offers a legally compliant form of signature. The benefits are obvious: in the digital environment, you can create a clear expression of will that is recognized as full-fledged in court. Contract software offers further advantages in terms of legal certainty: Individual steps can be traced at any time and from any location. This means, for example, that changes to content can always be traced directly back to the respective user.
A system for digital contracts and signatures even knows at what time a change took place. In addition, it helps employees to create smooth workflows for contracts: Once you have put your signature, the software knows to whom the document must be transmitted in the next step and also what this person has to do. In this way, delays can be avoided, especially when forwarding contracts.
6. Digital contract management in GEDYS IntraWare CRM
No matter in which industry you work, the Contracts module of the GEDYS IntraWare CRM software supports the complete life cycle of a contract: from contract entry to contract creation, deadline and task monitoring to controlling. In the digital contract file, all associated documents, information and attachments can be quickly found by all parties involved. Thus, the level of information is always uniform and up-to-date. With defined workflows , coordination between departments and the legal department is supported and accelerated. You also have approval processes with version and template management, deadlines, terminations or extensions under control. If you are interested, please call us : TEL: +49 531 123 868 420.
Result: With the introduction of qualified electronic signatures and digital contract management, you not only gain legal certainty but also save a lot of paper and time. Set an example for sustainability and already have resources: Use Digital Signing!