Electronic Signature Guide
IT and legal security of electronic documents through digital signatures in contract management
Today, international borders are becoming less and less of a barrier to doing business. More and more companies are realizing that business fundamentals such as electronic signatures are a prerequisite for digitizing many processes, implementing them paperlessly and without media discontinuity, and thus remaining competitive in the global economy.
The adoption of the European Directive 1999/93/EC of December 13, 1999 provides a framework for the use of Electronic Signatures in electronic contracts in the EU. Electronic signatures are actively used in Europe and around the world to speed up business transactions.
What are electronic signatures?
An electronic signature is a legally binding method of agreeing to a digital document. This signature is used to attribute a document to the signer or signatory. The electronic signature is used to authenticate the signer and can replace handwritten signatures in private or business transactions. The legal basis is Regulation (EU) No. 910/2014.
Simple electronic signature
The simple electronic signature is the simplest way to sign documents digitally. It does not require any special technical precautions and is created using freely available software or in an Internet browser. The digitized lettering of a signature as well as the signature in the form of an e-mail footer constitute a simple signature.
Advanced electronic signature
An advanced electronic signature uniquely identifies the signer as the author of a document. An advanced electronic signature is created with a unique signature key and is technically a software certificate. This is exclusively assigned to the signature key holder, enables his identification and ensures the integrity of the signed document. The advanced electronic signature is legally equivalent to the handwritten signature.
Legally, an electronic signature cannot be rejected because it is only:
- it is in electronic form
- it is not based on a qualified certificate
- it is not based on a qualified certificate issued by an accredited certification authority
- it was not created on a secure device.
An advanced signature is generally a specific type of signature that meets a number of additional criteria for identifying the signer. The purpose of the advanced electronic signature is to authenticate the signer that he is the person he claims to be.
A qualified certificate is not an electronic signature. It is a technical mechanism for establishing the source of an electronic message. When combined with an advanced electronic signature, a qualified certificate becomes a "functional equivalent" of a handwritten signature.
Qualified electronic signature
The highest requirements are placed on qualified electronic signatures, which can replace the signature required on paper for digital documents. For the qualified electronic signature, the requirements that apply to the advanced signature are extended by two features: it is described as "an advanced electronic signature that is created by a qualified electronic signature creation device and is based on a qualified certificate for electronic signatures". The key difference here is the "qualified certificate", which is issued by a trusted authority. This verifies the identity of the person to whom this key belongs. The certification bodies are controlled by the Federal Office for Information Security (BSI) in Germany and by equivalent bodies in other European countries.
An advanced signature is a signature that is
- is exclusively assigned to the signatory
- allows the identification of the signatory
- is created by means that the signatory can keep under his sole control, is linked to the data to which it relates in such a way that any subsequent modification of the data can be detected.
Electronic signatures are regulated at EU level through elDAS. In 2017, eIDAS implementation legislation came into force, bringing national law into line with the European eIDAS regulation for digital signatures and electronic identification systems (eID).
Possible applications of signatures in contract management
Contract management in the business customer environment is increasingly digital. This requires legally binding signatures that are deposited using digital signatures. This is where the use of advanced electronic signatures comes into play, and they offer many advantages in contract management: The signing process is considerably simplified and shortened, and the contractual partners are on the safe side thanks to state-of-the-art encryption technologies. Digitally signed contract documents are on a higher security level than the paper version, they are traceable and forgery-proof. Electronic signatures can also be used for approving business transactions and individual process steps within approval processes. In quality management processes, signatures can be used to map the confirmation by employees of procedural descriptions and work instructions, from acknowledgement and approval to the implementation of training.
Reasons for using digital documents including signature
Manual process steps and paper-related costs for forwarding or storing documents are significantly reduced by switching to electronic signatures. Digitally created forms can be sent and tracked more easily and securely. Resulting in:
- improved control or visibility of documents in the process
- very high turnaround times
- reduction of error rates
- high distribution costs of print documents are eliminated
- convenient and easy access to digital document content via the search function
The purpose of a digital signature is to sign documents or contracts with the help of a neutral, the third-party provider. Digitally signed documents are more credible than scanned versions of manually signed documents because a digital signature cannot be forged. Black ink signatures are even considered easier to forge. Each time a digitally signed document is opened, it is matched and validated against the digital signature in the third-party vendor's database. The third-party provider acts as an authority to confirm and accredit the identity of the signer.
Contract templates form the basis of contract management at Synertrade to define contract types and clauses. Forms are assigned to these templates to define, per contract template and contract type, the information that is filled in when contracts are entered. Here, all header and item data is recorded, such as the conditions and contract items. An important point here is also the deadline management as well as the viewing and editing rights.
The process of contract creation and the corresponding assignment of clauses consists in filling out a wizard-driven questionnaire. Based on the answers given in the wizard and the various possible combinations, the appropriate clauses are automatically assigned to the contract to be created. The completed contract can now go through an automated review and approval workflow. The approval process can be implemented with internal and external partners. You are thus able to integrate both the internal legal department and external law firms with the review and approval of contracts within the contract creation process. The final step is the conclusion of the contract by the supplier or partner and completes the process. The approval or signature of the contract can be done with authentication via desktop, mobile app or via SMS.
Synertrade extends its contract management solution with additional signature providers, thus integrating Adobe Sign and HelloSign solutions from Dropbox in addition to the existing DocuSign. This gives our customers the maximum flexibility in implementing their contract management processes. This means that the approval process for contracts can be mapped completely without media discontinuity.
The follow-up processes with the management of the contracts are carried out in the other integrated modules in Synertrade's Accelerate, such as the purchase-to-pay module.
Digitalized business processes and electronic contract management is a must in times of rapidly advancing digitalization in B2B. Synertrade's contract management ensures that you can always keep a transparent eye on a contract throughout its entire lifecycle: from initiation, to digital signing, to defining and meeting deadlines. Digitized contract management covers the entire contract process, before and after signature. In addition to comprehensive transparency, Synertrade's digital contract management saves companies time and money. Inconvenient manual steps such as printing, signing and returning contracts by mail or fax are completely eliminated. In addition, digital contract processes are easier to trace back to avoid errors.