E-signatures versus digital signatures: What procurement needs to know

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Buyers are continually turning to new technology to take the menial, day-to-day tasks off their hands. E-signatures and digital signatures may be another means of streamlining processes, but what do procurement teams need to be aware of when it comes to these endpoint detection and response technologies?


Digital signatures are not to be confused with e-signatures. Digital signatures offer a fingerprint of the document assigned to an individual’s identity. When an individual signs the document, information is embedded into it and the document will show if anyone tries to tamper with it after it was signed. Due to this high level of security, digital signatures are often accepted by countries around the world as they comply with national security regulations, yet they cannot be legally binding unless used with an e-signature.


E-signatures, on the other hand, are seen as more user-friendly as they allow professionals to simply sign a digital document using their fingers or a pen, but they are not as strictly regulated as digital ones. Unlike a digital signature, an e-signature can stand alone as a symbol of consent and can be legally binding.


Integrating a virtual signature system can bring a number of benefits to procurement. According to Aiim research, 56% of organisations use paper for contracts and order forms and a further 40% continue to file important documents by printing out details. For procurement teams looking to boost their environmental ethics and become better aligned with CSR objectives, introducing virtual contracts with virtual signatures can accelerate this aim.


Further, the supply chain is often based across the globe, making flying back and forth to get contracts signed a lengthy process. Using virtual signatures avoids this process altogether and speeds up the contractual process as well as saving time and money. Investing in this type of technology also allows procurement to track and manage contracts during the entire process. This means that the function can be on top of its contracts and manage them in a much more productive way.


Automating the interation with suppliers over contracts will no doubt free up time and resources for those involved with the buying process to turn their attentions to more innovative processes, but this may come at a cost.


Of course, signing contracts virtually can bring with it a number of risks. E-signatures are not regulated like digital signatures and so a certain level of trust is required between procurement and the supplier that the signatures are secure. While e-signatures are as legally binding as a written signature, according to the US Electronic Signatures in Global and International Commerce Act, some types of documents, however, cannot be signed electronically and some countries do not accept e-signatures or may demand a chain of evidence after something is signed, in order to tackle this security issue.

Procurement needs to do its research and take into account where suppliers are based and which countries it is doing business in before introducing this process.


Service providers, types of software and regional legislation also need to be taken into account. Arguably having a lawyer to guide procurement through the realm of virtual signatures is a preventative measure that may be worth taking.


As procurement strives to move away from traditional back-office tasks, technology is the obvious way forward. But security issues need to be taken into account so that the transition to a more streamlined process is smooth.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.


Sophie Dyer
Posted by Sophie Dyer

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