Signing documents has been a part of business contracts since before paper even existed. Having something in writing has always been what makes a transaction truly “official.” Lately, the next chapter in the written agreement is unfolding on the digital frontier. Electronic signatures are becoming the new standard for completing transactions all over the world.

As with any new technology, e-signatures raise almost as many questions as the problems they resolve. Are they legally binding? How can one know they are safe? Combine these concerns with the trend toward using cloud computing– and you have additional reasons for concern.

Let’s address some of the common issues and questions about e-signatures and cloud computing in this article.

Why Use Digital Signatures?

The reasons why digital or electronic signatures are preferred over hard copy are obvious. Contracts can easily be signed with people in other countries without waiting for mail, scanning documents or any of the other issues normally associated with getting something signed.

Digital signature systems that are properly designed also make it easy to maintain an audit trail of who signed what. This record keeping is very important in the event that legal action related to the contract must be taken. While scanning signed hard copies can provide quick response, it offers little of the audit trail that a third-party electronic system provides.

Are Electronic Signatures Legal?

Like anything that goes digital, people are always a bit worried about if it’s legal and safe. As far as legality goes, electronic signatures have been completely legal for over a decade. In 2000, the Electronic Signatures in Global and National Commerce law, or ESIGN, was passed making e-signatures legally binding and acceptable for transactions around the world. Europe and Canada followed suit and adopted similar legal laws.

Does this mean any kind of digital signature is a safe bet? Not really. Electronic signatures have been challenged in court. Important factors in making the signature legal was how secure the archiving and retrieval system was as far as the overall audit trail provided by the system. Knowing exactly who signed a document and verifying their identification was very important. Any electronic system used for collecting and archiving signatures should provide this level of authentication.

Electronic Signatures and Cloud Computing

With dedicated hosting on the decline and cloud computing becoming the new standard information technology infrastructure, some serious questions come up about how safe and secure your documents really are. How does cloud hosting of e-signing solutions present a security concern?

Many alarmists point to the shared nature of cloud hosting solutions as an automatic security risk. The fact that several computer systems share a single storage area network that may contain private data make some people nervous. The truth of the matter is though, the same level of risk exists on any system that is not properly designed and maintained.

Cloud computing systems have matured from an unreliable and unsecure prototype technology to a fully functional well-supported trustworthy infrastructure solution. Clear security protocols audit what all users do and partition data from one client away from that of another. Of course, any computer system is only as good as the technicians who maintain it. For this reason, it does pay to investigate what technology is behind the electronic hosting system that you select.

Fortunately, the industry of cloud hosting has lots of standardized security certification programs that include regular audits and a commitment to keeping systems up to date. If you make sure your e-signature solution is using such a system, you can rest easy knowing that your authentication and archive processes are safe and secure.

Electronic signature systems are definitely here to stay and have the legal and security behind them to make them a valid solution. Find out how you can streamline the legal aspects of your business by setting up one of these systems today.