Electronic signatures in business: implementation and uses

Where can a business use electronic signatures? They have applications in HR and marketing alike. What should a business consider before adopting them?

As technology advances, many companies are automating and digitalising their processes. Electronic signatures are undoubtedly part of that change. Practitioners explained to Podnikajte.sk:

• where electronic signatures can be used and when it is better to sign documents physically,
• how to proceed if a company decides to sign documents electronically,
• how long it can take to integrate electronic signing into a company's processes,
• what usually motivates businesses to adopt electronic signatures, and why it is often not cost savings.

What is an electronic signature? What types are there and how do they differ?

Not all electronic signatures are the same. The EU eIDAS Regulation, which sets the conditions for electronic identification, distinguishes three types of electronic signature:

1. simple electronic signature,
2. advanced electronic signature,
3. qualified electronic signature (QES).

The difference lies not only in the format of each signature but also in how it is used. Lukáš Búri of Anasoft, a company focused on software solutions and technology innovation, explains that a simple electronic signature has no precisely defined criteria for its format or level of security. It is usually a signature in an email, a scanned handwritten signature and the like.

An advanced signature must meet several criteria. According to L. Búri, under eIDAS such a signature must:

• contain a set of data uniquely linked to the signatory (e.g. email address, phone number, IP address, GPS and so on), and this data set must make it possible to identify the signatory,
• be created using data that the signatory can, with a high level of confidence, use under their sole control, and
• be linked to the data signed with it in such a way that any subsequent change in the data is detectable.

“An advanced signature therefore guarantees greater security and makes it possible to identify the signatory. Examples include a handwritten electronic signature with a very precise record of stroke speed, pressure and so on, or signing documents in a secure zone (e.g. internet banking), where the client signs by entering a password from two-factor authentication (e.g. a token from the bank's app),” the expert describes.

He adds that the third option, a qualified electronic signature, is also a form of advanced signature, but additional security and signatory identification requirements must be met:

• the certificate for the qualified signature is issued by a certification authority (e.g. the Root Certification Authority of the National Security Authority; the National Security Authority publishes an up-to-date list of all certification authorities in Slovakia on its website),
• the certificate is stored on a medium certified by the National Security Authority (e.g. an ID card).

L. Búri explains that the main difference between a simple/advanced signature and a qualified signature is that a QES itself contains the signatory's identity, verified by a certification authority. In other forms of signature, the signatory's identity is captured, for example, in a biometric signature or in other data describing the signing process (GPS, IP, delivery of the document by email, entry of a one-time password, login to a client zone/internet banking and so on).

Where can an electronic signature be used?

Oliver Majdúch of the law firm MATHISON legal points out that all types of signature can be used in a business environment, but the Civil Code gives the same effect as a handwritten signature only to a qualified electronic signature. “That is why a QES can be used wherever a handwritten signature is required,” the lawyer says, adding that it is the only type of electronic signature that can be used when communicating with public authorities. “Signing documents that require a certified signature differs from standard signing. In those cases, a time stamp is attached to the QES.”

In some cases, however, a physical signature on paper is preferred because of related administrative steps or for certainty and security. “There are also specific cases where certain acts towards public authorities cannot be carried out electronically, for example when setting up a non-investment fund, where paper form is required. Conversely, paper can no longer be used for filings with the Commercial Register (since 1 October 2020, filings are electronic only). The state is gradually moving individual forms of communication online,” says O. Majdúch.

Electronic signatures have far wider uses than filings with the Commercial Register or submitting tax returns. They are also used in communication between companies; they can be used to sign contracts with customers or partners, purchase orders, affidavits and more. Pavol Katrenčík, ITS Portfolio Manager at Konica Minolta, says they have identified more than 200 different uses of electronic signatures, and more keep emerging where an electronic signature can replace a paper one within individual departments and companies.

Electronic signing also has its place in a company's internal processes. “We have clients who electronically sign monthly attendance records, especially in production, where hours worked are approved,” explains P. Katrenčík, giving further examples such as approving overtime, premiums and bonuses. In marketing, it covers approving the marketing budget, consent to list a client as a reference customer, sponsorship agreements, advertising contracts and so on.

On the use of electronic signatures in companies, L. Búri of Anasoft adds that unless the law requires a handwritten signature on paper or a QES (e.g. when filing a tax return), any form of electronic signature can be used. In his view, the most widespread type is the advanced electronic signature, because it represents the “happy medium” between ease of use and trustworthiness. “For commercial practice, it makes more sense to digitalise the usual paper process with an advanced electronic signature,” the expert says.

How to start using electronic signatures: implementation need not be complicated, and what costs to expect

To sign with a qualified electronic signature, you need an ID card with a chip, i.e. an eID card activated for electronic use, with the necessary certificates installed, plus the relevant application and a card reader. Other types of electronic signature can be created using various applications, and the process is relatively simple. “Many companies sell ready-made signing solutions that can be used almost immediately. They offer basic integration options and preset processes,” explains L. Búri, adding that it depends on whether a company can work with a ready-made solution or needs to adapt it more to its infrastructure and processes.

The expert also explains that implementing electronic signing can take several weeks or even a year. It all depends on the complexity of the company's processes, the business's specific requirements, the number of integrated systems and the form of signature. “The overall implementation time also includes adapting the company's internal systems, which is usually handled by the suppliers of those systems.”

“If a company prefers a solution that is ready to use straight away, it can opt for cloud services such as the Slovak OK dokument. In that case, costs are limited to choosing a specific package of features defined by the service provider. These usually cover the number of accounts, the volume of signed documents or additional integration services (e.g. Google Drive). The implementation costs of such a service are lower, but they offer a much narrower range of customisation options. You also need to bear in mind that documents leave the company's IT infrastructure.”

P. Katrenčík talks about a relatively simple solution. In his words, electronic signing applications such as Signi or DocuSign are widespread today and used by hundreds of companies in Slovakia and the Czech Republic. They work without complex programming; within a few minutes you can register and start sending or signing documents electronically. “You do not need to install anything extra; a smartphone or a computer with internet access is enough. When it comes to connecting to other company systems, it is better to link the signing application directly to the system where, for example, contracts are generated, so that employees do not have to learn to work in a new environment. Employees who send contracts for signature (e.g. sales staff) simply get a ‘Send for signature’ button in their current system (e.g. the sales system where they record the contract), which they use to send the document for signing. The whole process then runs in the background, without the employee needing to see it. For example, approval by a lawyer or the CEO based on rules, followed by signature by the parties involved and storage in an electronic archive,” Katrenčík describes. He points out, however, that in that case a connection is needed, an integration of the signing application with the current system, for which it is advisable to involve the IT department or an external partner.

L. Búri adds that many companies offer to adapt ready-made solutions to a business's specific requirements, tailoring them to the business both functionally and visually.

As for costs, according to L. Búri you need to distinguish between a ready-made solution, where the company buys a service, and a custom-developed solution. With the latter, you should expect a licence fee or development fee (costs can run to thousands of euros). Other factors may include the cost of the hardware needed for signing (tablets, signature pads, computers), the cost of adapting the company's internal systems and the cost of the time employees spend on electronic signatures.

How to start using electronic signatures: IT knowledge is not enough, employees need to be prepared too

If a company decides to introduce electronic signing of documents (e.g. contracts), it needs to weigh several factors and answer a number of questions. L. Búri gave the following examples:

• Why does the company need to sign electronically and what will it bring?
• Analysis of the current signing process: How does it sign on paper and how does it want to sign electronically?
• Which documents does the business want to sign electronically?
• Where will signing take place?
• Which form of electronic signature suits it?
• Where will the electronic documents be created and where will they be archived?
• How will it deliver the electronic documents to the client?
• What will the impact be on internal systems?

The experts agree, however, that many businesses underestimate internal preparation. Starting to use electronic signatures requires training users, i.e. employees, and setting up the process internally, for example that contracts will no longer be sent by post and scanned into the archive. “Clearly explain to staff how to send a document and where the electronic originals should be archived, or set this up in the application. Experience shows that it is better to bring in a partner who will help the client and design the process based on their best experience. It is also important to involve the legal department to recommend which contracts to sign and how,” says P. Katrenčík, adding that it is important for the company to involve its IT department when implementing electronic signing software, to set up access, permissions and various other settings.

L. Búri of Anasoft, for his part, recommends starting gradually, choosing just one type of document or process at your discretion, ideally those with the simplest signing process, which will bring an immediate benefit. “Then you need to evaluate how signing went from the creation of the document to the feedback, draw conclusions, propose improvements and move on to digitalising the next process.”

Advantages and benefits of electronic signatures for a company

Introducing electronic signing (e.g. of contracts or internal documents) brings several advantages. The experts agree that electronic signatures speed up company processes, saving both time and money. P. Katrenčík says that such a change may seem complex, but from practical experience he knows that businesses that start signing contracts electronically quickly come to like it for its simplicity. “They have greater convenience, they sign anytime and anywhere, and they have a better overview and contracts signed faster that do not get lost.”

Last but not least, digitalising administration and documents also has an impact on the environment. L. Búri explains, however, that although electronic signing brings fewer paper documents and the related costs (archiving paper records, sending physical post and so on), this is not the main motivation for many companies to use electronic signatures. In his view, the biggest benefits include eliminating manual errors, faster processing of electronic documents and faster performance of the contract (invoicing, service delivery and so on). Agreements with counterparties can also be signed remotely, which eliminates printing and scanning signed documents, and security is another advantage.

“Electronic signatures are becoming the standard today. The question is not whether they increase a company's competitiveness, but whether physical signatures are slowing down otherwise effective digitalisation of companies,” concludes L. Búri.

Source: https://www.podnikajte.sk/informacne-technologie/elektronicky-podpis-implementacia-vyuzitie