What are the Advantages of Digital Contracts?

Even before the Coronavirus pandemic forced many of us to work from home, digitization in the 90s and 00s made working remotely possible. New and effective technology meant people could still be productive as long as they had a computer and an internet connection. They could stay communicating with colleagues, working towards one final aim or target. 

That technology and digitization continues to develop. One such area that has been dramatically improved with technology is that of contract creation. In this age of digitization, completing a contract no longer needs to be a laborious and time consuming process. Instead, through leveraging technology surrounding digital contracts, companies can streamline the entire process by improving communication and collaboration. However, there are more advantages than just process efficiency. Here, we look at the advantages of digital contracts as well as how digital contracts work and how to sign digital contracts using an electronic signature or a digital signature. 
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Advantages of digital contracts

1. Time-saving

Perhaps the most blatantly obvious but important is the amount of time (and therefore money) that digital contracts and the use of digital signatures can save. By not having to post hard copies of contracts to relevant parties at each stage of negotiations or drafts, as well as the final signature stage, time and effort are both reduced. The result is that employees or companies can dedicate their energies into other parts of the business to add real value. 

2. Cloud storage of digital contracts

The ability to store digital contracts in cloud storage is hugely beneficial. It means that contracts are easily accessible to those that need to see them - from anywhere. In the times of increased remote working or having many different company buildings, being able to work from a contract wherever you are is a far more efficient way of working. Plus, that storage is safe too. Not only is it digitally secure from hackers, but it also means the chances of being lost are eliminated. The same cannot be said of hard copy contracts. Legal risk is therefore diminished as a result.

3. Collaborate with your team on the same contracts

By being able to access contracts from anywhere, the ability to collaborate more easily with colleagues on the same contract is also possible. That collaboration can be quick when using a platform created purely for that reason. It quickens and smooths the process, making contract management that much easier. Again, this can leave people free to channel their energies into other places and projects, leaving them to be more productive and profitable. And, when contracts are completed, they can be referred to easily too. That is important in the cases of contracts that can be used to resolve legal disputes or simply ensure the terms of the contract are being adhered to.  

How do digital contracts work

Digital contracts work by moving all paperwork regarding a contract online. They are a means of reducing the time taken to create and complete on a contract. By moving contracts in a digital space, repeat copies and drafts of contracts are not required. Instead, versions can either be emailed to relevant parties, or better still, the use of an all in one platform like Contractbook’s can take the hassle out of the contract lifecycle process. A key part of Contractbook’s product is the platform’s ability to allow collaboration on one contract. It diminishes the risk of different versions being created and then subsequently incorrectly used. 

Finally, the platform allows digital contracts to be stored more effectively. Documents do not go missing as the hard copy is rarely produced. Instead, as everything is kept online, it is stored in a cloud and easier to find when needed. 

How to sign digital contracts - using an electronic signature or digital signature

Fully understanding how to sign a digital contract is perhaps the most important aspect of knowing how they work. While many may say signing a digital contract is simply employing the use of an electronic signature, there is a little more to it than that. Especially if you are using a programme or piece of software that is reliable, legitimate and secure. 

For a digital signature to be secure, it must be authorised and authenticated. Digital contract software that is worthwhile using will often use a qualified certificate for example. The electronic signature that stems from that certificate will be possible due to the certificate being authenticated. In the most part that means a person’s online banking details or other credible sources. 

When put to real life use, a digital signature will work by following a few simple steps that are common to digital contract software. The software will allocate a page for digital signatures. That contract is sent to those that need to sign it. It is sent by the software which then (should) require two factor authentication for the contract to be accessed. If two factor authentication is not present, a similar but equally strong security measure must be in place. The software allows the relevant parties to click and sign in the signature boxes. And the contract is sent back to the original party and all involved are informed that the contract is signed, and therefore in effect. 

Overall takeaways of electronic contracts and digital signatures

Electronic contracts and digital signatures are, in our view, a win win situation. Creating and completing a contract digitally is a far smoother process - especially when employing the use of a specialised software package like ours. And, from a reference and storage point of view, contracts that are digitized are in every way better to use. Ultimately, we do not see any way that they are superior to hard copy contracts.