Digitization and moving to technological solutions for compliance and governance has often come across a stumbling block in the form of signatures. While the idea of entity management software can be appealing, legal operations may still need to manually handle the process of obtaining stakeholder signatures for approvals, and that can clash with the efficiencies and benefits of entity management software.
The traditional process for obtaining signatures goes something like this:
- The need for a signature is identified and communicated
- Document is printed or saved electronically
- Document is sent to signatory by email or post
- Document is printed for signing manually
- Document is scanned and emailed, or sent back via post
- Document is checked and filed in physical storage, or scanned and uploaded to a server
This process is fraught with risk – risk that the document is intercepted, lost or returned incomplete. There’s also the potential need to chase down signatures from busy stakeholders or directors who are rarely at their desks. And when that document needs to be accessed as part of, say, an audit process? That’s a manual search through filing cabinets or a local server, trying to identify the most recent version of the document.
However, technology has come a long way and legal operations teams can now streamline that process by integrating eSignature solutions into their entity management software.
How do eSignatures work?
Digital signatures, or eSignatures, work like electronic fingerprints. The eSignature software embeds a coded message when a document is signed, securely associating a signer with a document in a recorded transaction. Using Public Key Infrastructure, or PKI, to provide the highest levels of security and universal acceptance, the eSignature captures a whole range of data about the signatory – when they accessed the document, from where and so on. It’s based on a mathematical algorithm to generate two long numbers, called keys – one public and one private.
“When a signer electronically signs a document, the signature is created using the signer’s private key, which is always securely kept by the signer,” writes DocuSign, one of the leading eSignature software providers. “The mathematical algorithm acts like a cipher, creating data matching the signed document, called a hash, and encrypting that data. The resulting encrypted data is the digital signature. The signature is also marked with the time that the document was signed. If the document changes after signing, the digital signature is invalidated.”
The benefits of eSignatures for entity management
When adding eSignature solutions to entity management software, organizations can completely digitize compliance and governance, and reap the rewards of the benefits of eSignatures, such as the following:
When an organization’s compliance process still relies on manual printing and sending of documents for signing, or even emailing documents that must then be printed, signed, scanned-in and returned for onward processing, it adds time to the signatory process. Adding the time needed to chase down the stakeholder for their signature, and the issue of what to do with the physical copies once they’re completed, can result in a compliance process that’s less than gold-standard efficient. In fact, a Forrester Total Economic Impact study commissioned by DocuSign found that organizations gained 1.6 hours of productivity per transaction handled by digital signatures, which equated to between 8,700 and 10,500 hours over an entire year.
Incidentally, the same Forrester study also found a savings of £6.62 (approximately US$8.13) in printing and follow-on costs per transaction, so it’s not just man-hours saved through digitization. After interviewing their sample, Forrester found risk-adjusted present value (PV) quantified benefits including more than £170,000 (over US$200,000) in improved processes and employee productivity gained through using eSignature processes, as well as reduced operational expenses of more than £160,000 (almost US$200,000). This came with an ROI of 121%.
All it takes to forge a signature on paper is a pen and some bravado; eSignatures, on the other hand, carry a lot of additional information about the signatory. The bank-level encryption, tamper-proof certificates and multi-step authentication are part of a full audit trail that provides plenty of evidence about the signing process, helping to mitigate the risk of fraud as well as providing a secure online audit trail.
Eliminate manual errors
Handling the entire process digitally also helps to eliminate manual errors, such as the wrong document being signed in the wrong place, or worse, a signed document getting lost just as it needs to be filed with the regulators. With documents created, signed and stored within the entity management system, the right information can always get to the right people at the right time.
Reducing the physical paper trail and integrating eSignatures with a secure end-to-end entity management system means a higher standard of security in the compliance process. There’s less chance for organizations to send an incorrect document, and less chance of bad actors exploiting cybersecurity vulnerabilities (such as a hacked email server leaking confidential corporate information).
Creating an audit trail
A digital end-to-end compliance process, and one of the big benefits of eSignatures for entity management, is the automatically created audit trail. Every time a digital document is accessed, it leaves a fingerprint that can be tracked to specific users, times and locations. This can be useful if auditors want to scrutinize the lifespan of a contract, for example. Reports can also be generated from within the entity management software to highlight any issues with the signatory process, and easily rectified from within the system using eSignatures.
Get more time for strategic entity management
Of course, the biggest and most compelling argument for the benefits of eSignatures in entity management software is not cost, efficiency or security – though those are hefty arguments. It’s the fact that all of this combined creates the space for compliance, governance and legal operations teams to think more strategically about entity management. It can spell the end of reactive compliance, and bring in an era of proactive governance.
When eSignatures meet entity management software
Signatures in general are an integral part of acquiring actioned outcomes for the corporate secretary and legal operations teams, and the case for digitizing the end-to-end entity management and compliance process through adding eSignatures to entity management software is increasingly compelling.
By integrating eSignatures with entity management software, the end-to-end process becomes more efficient, more secure, more easily auditable and less risky. Organizations can save time and money, giving their compliance and governance managers the time to be more strategic about entity management. The right entity management software properly distribute materials to one or more named signatories with a deadline, and documents can be signed via web browser or mobile applications – meaning that elusive director on the other side of the world doesn’t have to be at his desk to sign the document. Signature requests and notifications are managed and tracked centrally, with an audit trail automatically generated.
Get in touch and schedule a demo to see how Diligent Entities can streamline your compliance processes, and make the most of the benefits of eSignatures for entity management.