Digital Signatures for Credit Applications – A Best Practice

Electronic Signatures, Digital Signatures, E-Sign Apps

The Electronic Signatures in Global and National Commerce Act and The Electronic Signatures in Global and National Commerce Act (E-Sign Act)  signed into law on June 30, 2000, provide general rules of validity for electronic records and signatures for transactions in or affecting interstate or foreign commerce. In addition, several inexpensive, feature-rich apps provide digital signatures, including DocuSign, Adobe, and HelloSign.

Speed Customer Onboarding

The e-signature is integrated directly into the automated credit application and business terms agreement for onboarding new customers. In one seamless process, the customer fills in the credit information and references, agrees to the terms, E-signs, and clicks to submit, all without any paper. You will be able to cut your process from days to hours.

Powerful Past Due Account Collection Tool

Past-due customers can be hard to pin down and, even if they make a deal to pay on a specific date, it doesn’t happen. You can better ensure that you get the payment by completing the verbal payment deal and immediately sending a preformatted payment agreement (even a promissory note) for the debtor’s signature. If you set up a re-usable template in the E-sign app of your choice, you can do this while you are still on the phone with the deadbeat. “Check your email – I just sent an agreement confirming our deal. I’ll hold on while you review and sign”.

There are four essential parts required for an electronic signature to be recognized.

1. The parties have to intend to sign, just as with any written contract.
2. The parties must agree to do business electronically. Between businesses, this can be established by the circumstances of the interaction. This acknowledgment is also part of the digital signature app. In the case of consumers, however, they must affirmatively consent to the use of electronic records and receive related consent disclosures.
3. The e-signature system must capture and keep the record reflecting the process of creating the “signature” or generate a graphical or textual statement proving who executed it.
4. The United States Laws require that the e-signature records be capable of retention and reproduction by the parties.

The E-SIGN Act and its precursor, UETA, solidified the use of electronic records and electronic signatures in commerce by confirming that electronic records and signatures carry the same weight and have the same legal effect as traditional paper documents and wet-ink signatures. Both laws provide that no contract, signature, or record shall be denied legal effect solely because it is in electronic form.

Note: We do not provide legal advice, and we always recommend you consult with your counsel if you have any concerns. Certain documents are not appropriate for e-signatures, including wills and trusts, powers of attorney, and declarations under oath.