What Is a Digital Contract and How Can They Revolutionize Your Business?
Table of contents
- What is a digital contract?
- What is an e-signature?
- Digital contract terminology
- What are the differences between digital contracts vs. traditional contracts?
- Digital contracts are safer, easier, and faster
Written by Timothy Ware
A digital contract is the online version of a paper contract. Instead of signing your name with a pen, you sign it with an e-signature. This very simple modernization can have a huge effect on your business.
In this article, I’ll walk you through digital contracts, e-signatures, and all the other terminology you need to know to be comfortable moving your contracting processes online.
The digital contract revolution is unfolding at record pace. Thankfully, SignTime has you covered with this recent article detailing everything you need to know about digital contracts. That way, when it comes time to sign up for our free trial, you can be confident that you’ve made the right choice for your firm.
What is a digital contract?
A digital contract is exactly the same as a traditional contract without all the hassle. Think back to the last time you signed a contract. How did that go? It probably fell into one of two scenarios.
· You met the other party of the contract in person. You went over the contract together one last time after weeks of revisions. The two of you pulled out pens, signed, initialed, and dated where necessary.
· You and the other party were unable to meet in person. One of you printed off the final contract, filled out all needed information, signed it, and then scanned the document. Then, the other party printed off the scanned document and did the same.
Both cases are inefficient, costly, and add a barrier to getting documents signed. If that contract is for a big sale, then removing the hurdle of meeting in person, or the print–scan–sign cycles, is even more important.
After two rounds of printing and scanning, you’re lucky if you can even read the document. In fact, depending on how many contracts you need to store, you’ll be lucky if you can even find it!
A digital contract removes all of these problems by allowing parties to sign documents with an “e-signature” on their laptop or smartphone. Then, the digital contract can be stored in (and retrieved from) the cloud.
What is an e-signature?
An e-signature is the digital equivalent of your signature. Instead of needing to pull out a pen, your e-signature is stored as an image. Most digital contract software provides several options for creating an e-signature.
For example, you can sign using your mouse or a touchpad, allow the system to create an e-signature from your typed name, or you can use a camera or scanner to upload your actual signature from a piece of paper.
Once you have your e-signature, you can start e-signing digital contracts! It should be stressed here that e-signatures are very safe—in fact, they are safer than a handwritten signature. This is because the metadata stored along with the image shows when it was created and by whom. Even if someone tries to e-sign a digital contract with a copy of your e-signature, it is easy to show that the e-signature has been copied and that the document is fraudulent.
Digital contract terminology
There’s lots of online contract management terminology thrown around. Thankfully, most of it means the same thing and the industry just hasn’t standardized the vocabulary yet.
Electronic signature, eSignature, and e-signature
These are all the same. An e-signature lets you sign digital contracts with a personalized signature image.
Electronic contract, online contract, e-contract, and digital contract
These are all the same too. It is just the pdf or Word version of a traditional printed contract.
Digital contract management, contract management software, and digital contract software
You guessed it—all the same. These are programs like SignTime that enable the whole digital contract system.
A contract repository is basically your filing cabinet in the cloud. Instead of taking up valuable real estate in your office with an old-fashioned coding system that makes it impossible to find a document when you need it, digital contracts can be accessed anywhere.
You can also tag a contract with many different keywords, for example the date, company name, contract type, and signatories, so they are easy to find. Again, don’t worry about digital contracts being less safe. It’s far easier for a thief to get into an office building than for a hacker to gain access to a properly encrypted database.
What are the differences between digital contracts vs. traditional contracts?
Digital contracts have many advantages over traditional ones. I’ll focus on three here: time, cost, and accessibility.
The time it takes to draft a digital contract is very short compared to a traditional contract. Instead of marking up errors with a red pen to be returned to the writer for revisions, this can all be done together online in a single document.
Furthermore, good digital contract platforms offer the option to save and reuse contract templates. For contracts that largely do not change, for example non-disclosure agreements (NDAs), you can just send out the exact same version in seconds.
Then, when it comes time to sign the contract, there’s no waiting around for FedEx to ship out documents and have them returned later. This means employees get onboarded faster and sales don’t fall through after successful meetings.
There are two major ways digital contracts are far cheaper. First, you don’t need to drive around town or airmail documents across the world. This saves time and money.
Second, real estate isn’t cheap—and it is only getting more expensive by the day. You don’t want to be paying for office space just to store documents. Having a digital repository means that you can do away with all the cabinets in your back office.
Those cabinets in the back office? Good luck actually finding anything in them! With digital contracts, you can find the document you want immediately.
For example, SignTime offers a tagging system that allows you to tag each document with multiple tags that you can then use to quickly find any document. Need an NDA from 2021 for an employee? Search “NDA,” “2021,” and “employee,” and it’ll appear immediately.
Digital contracts are safer, easier, and faster
Digital contracts and e-signatures have built-in security systems that provide a level of safety that cannot be matched by pen and paper.
Your clients can e-sign on their couch using their smartphone. You can send out digital contracts and get them signed and returned in minutes.
If you haven’t converted to digital contracting yet, you should do so today!
Whether you are trying to simplify HR functions or get your next sales quote signed today, SignTime is here to help. We offer a full-service digital contract management solution with options geared towards any business size.
The easy-to-access and organized online contract repository means never searching for important paperwork again.
Sign up for our free trial now and start collecting e-signatures today.