How Electronic Signatures Work: The Complete FAQ on eSignatures

"How can eSignatures benefit business?"

"Love it, but where do I start to get the dang things integrated into my business processes?!"

"Can I trust eSignatures?"

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All day, every day, the Dropbox Sign team fields these and other questions about eSignatures. And they’re all great! So great, in fact, that we took the time to pick out some of our most-asked and most-interesting questions to compile this complete FAQ rundown on eSignatures.

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Dig in to finally learn the difference between digital signatures and electronic signatures, if eSignatures are really all that legal and secure, how to use eSignature software, the businesses benefits you could be enjoying, and several painless ways to integrate them into your day-to-day workflow.

What is the Difference Between a Digital Signature and an Electronic Signature?

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While most people use the terms “digital signature” and “electronic signature” (or “eSignature”) interchangeably, there is a difference between the two.

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An electronic signature refers to a legally-binding signature that just happens to be executed, well, electronically. At Dropbox Sign, we focus on maximizing the legality, security, and usability of eSignatures for small businesses and enterprise organizations alike.

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A digital signature, on the other hand, is a set of algorithms and encryptions that creates a unique digital fingerprint (or “hash”) for each person involved in the signing event. While we don't offer digital signatures specifically at Dropbox Sign, we do have "tamper proof PDFs" which add a similar level of protection to your documents.

Are Electronic Signatures Legal?

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Documents signed using an eSignature have the same legal protections as those signed with a pen. The Electronic Signatures in Global and National Commerce (E-SIGN) Act states that agreements, contracts, transactions, and other documents that are signed electronically won’t be denied legality because they don’t exist on paper.

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Good eSignature software will also adhere to important compliance regulations to keep your business legal and safe from costly fine and jail time. After all, why risk the security—or the revenue and the future—of your business on less-than-diligent information security standards?

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At Dropbox Sign, we protect our clients from the serious ramifications of noncompliance by building in processes that make sure our eSignature platform complies with the standards that govern your business.

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Dropbox

Sign is compliant with:

• SOC 2 Type I
• HIPAA
• The U.S. E-SIGN act of 2000
• Єдиний закон про електронні операції (EUTA) 1999 року
• The new eIDAS regulation for the EU of 2016 (EU Regulation 910/2014), which replaces the former European EC/1999/93 Directive
• Захист конфіденційності
• General Data Protection Regulation (GDPR)

How About eSignature Security?

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Whether you choose to build your own eSignature platform (read "Building vs. Building an eSignature API" to learn if that's the right route for you) or to partner with a provider that specializes in eSignature software (BTW, Dropbox Sign has been named the easiest eSignature tool to implement for several years in a row), it’s critical that your solution has three things: bank-level security, detailed audit trails, and thorough authentication.

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Bank-Level Security

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Bank-level security is a vital element for eSignature software as it assures that the data gathered from audit trails and authentication is trustworthy.

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At Dropbox Sign, all communications are safeguarded by Secure Sockets Layer (SSL) encryption. Each document is stored behind a firewall and authenticated against the sender’s session every time it’s requested. Documents are also encrypted with a unique key—each of which is in turn encrypted with a regularly rotated master key. So even if someone were able to bypass our stringent physical security, they still wouldn’t be able to decrypt your data.

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Detailed Audit Trails‍

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Audit trails ensure that every action on an electronic document is thoroughly tracked and time-stamped so you can tell if it was ever modified or tampered with without your knowledge. Dropbox Sign creates a comprehensive, non-editable transaction trail between signing parties to make sure every eSignature has a court-admissible audit trail.

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To provide you with transaction history, we track and timestamp various information—including IP and UserAgent info—from the moment the document is submitted for signature to when it is signed and completed. To help ensure that any tampering of your transaction log is detectable, we process each transaction with hashing technology. This provides a “copy” of every version of the document which you can use for comparison should a questionable version ever come to light.

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Thorough Authentication

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To maximize security, it’s important that your eSignature platform verifies that a user is who they say they are before they’re allowed to execute a signature or even access a document.

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When using Dropbox Sign, any person signing a document must either have login information or have received a request for signature via email. To ensure no one is able to access a Dropbox Sign user account without permission to sign or send documents fraudulently, all user information including usernames and passwords are 256-bit SSL encrypted. We also seek to prevent others from accessing or using your account by timing-out sessions and emailing you every time a contract is sent to, received by, or signed by your account.

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In addition, we offer two-factor authentication and codes that signers must enter to view or sign a document. All of the authentication data that a user provides to Dropbox Sign is encrypted and passwords are hashed and salted with an adaptive hashing algorithm.

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Legality and security all Greek to you? Get in touch and we’ll help you determine if Dropbox Sign is the right eSignature platform for your security and legality needs.

How Does eSignature Software Work?

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For the most part, modern eSignature software is designed to be as simple as possible for end users.

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For the person collecting one or more eSignatures, the steps will probably look something like this:

1. Upload a document or create one using built-in tools
2. Define the fields that need to be filled out (signature, address, date, etc.), whether they’re required, and who’s responsible for them
3. Place your fields where you want them in the document
4. Adjust any final settings—format the messaging in the send-off email, set up a signing order, and so on
5. Send the document off via email for signing!

For signers, it’s even simpler—get an email or another notification from an eSignature service, sign in or create an account, and create your signature using a stock font, a photo of your signature, or whatever other method is provided.

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Dropbox Sign maximizes usability with customizable workflows, business-class features and security, and integrations that make it easy to fill out and sign documents without leaving Dropbox, Salesforce, HubSpot, Microsoft OneDrive, G Suite, and other business application you use regularly.  

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Get a sneak peek at Dropbox Sign’s delightful interface in our blog on how to fill out a W-9 form online. Or, better yet, create a free account today!

What are the Business Benefits of Electronic Signatures?

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In an effort to avoid just saying “all the benefits!” (but really—all the benefits!), let’s explore three business departments where eSignatures make the biggest impact: HR, sales, and legal.

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Digital Signature Benefits for HR Employee Onboarding

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There are plenty of benefits awaiting the HR department that integrates a paperless eSignature platform into its employee onboarding process.

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Seamless Onboarding for Both Parties

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Eliminate redundancy for your HR team and reduce the friction that causes applicants to churn with Dropbox Sign API or Dropbox Forms.

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Dropbox Sign API empowers HR to take information provided during an applicant’s sign-up process and use it to automatically populate all the necessary paperwork, generate a set of personalized (and easy-to-read) PDFs, and send out the finished documents for the person to electronically sign right from their desktop or mobile device. Alternatively, Dropbox Forms further automates the process by making the form-filling experience mobile-first and intelligent. Learn more about Dropbox Forms for onboarding here.

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A Third-Party to Handle Technical Hassles

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HR departments love Dropbox sign’s eSignature platform because, even though it’s easy to use, it also comes with a developer-led support team that’s standing by to answer questions, get you set up in under a week, and manage all the technical details.

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Check out how Instacart grew rapidly thanks to Dropbox Sign’s eSignature software.

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The Benefits of Using eSignatures for Sales

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If your sales department is actually trying to make money instead of spending all of it on manual processes—we think you’re really going to like these benefits that eSignatures provide.

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Get to Revenue Faster

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With thoughtful business-class features like CCing, templates, and status notifications; sales teams are never stuck waiting for someone to notice that pile of paperwork sitting on their desk and holding up the engagement kickoff.

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Two Ways to Save

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Aside from the major operational cost savings that come with an eSignature platform, Dropbox Sign also offers actual monetary savings in the form of affordable annual and monthly packages. With a free trial, transparent pricing, and no hidden fees—sales teams in startups and enterprises alike are empowered to find the plan that fits their budget.

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Check out how Vendini used eSignatures to close sales in record time.

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How Any Sales, HR, or Legal Department Can Benefit from eSignatures

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Here are some of the ways in which most company departments can benefit from adopting a simple, efficient eSignature service—without losing important security and legality.

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Accurate, Secure Documentation

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When dealing with sensitive documents and high-level clients or high-powered executives, legal departments need an eSignature solution that’s not just accurate but extremely safe. Dropbox Sign comes standard with bank-level security like SSL encryption during file transit and secure server infrastructure hosted at a state-of-the-art Tier III, SSAE-16 certified data center with ISO 27001 certification. Trust us—that’s super secure.

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Simplified Technology Integration and Automation

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With an API that is constantly being updated and supported by our in-house engineering team, Dropbox Sign integrates smoothly into most existing workflows. Whether you’re using Google Drive, Dropbox, Salesforce, Microsoft OneDrive, or pretty much any of today’s best business applications; you can bet that Dropbox Sign will play nice.

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Increased Efficiency and Service

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Instead of cutting down on expenses by sacrificing service, legal departments can use modern technology like eSignatures to slash their overhead costs. Dropbox Sign’s business-focused eSignature platform helps digitize important legal documents to create a sharing and signing workflow that’s fast and secure whether there are 2 or 20 parties involved.

How Can I Make eSignatures a Part of My Workflow?

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Let’s just come right out and say it—we’re a bunch of eSignature workflow nerds here at Dropbox Sign! However, we get that not everyone is. So here’s everything you need to know about the different eSignature implementation options.

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Web App

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An out-of-the-box web-based eSignature application works for organizations who don’t have complex eSignature needs or tons of signing events. eSignature apps are ideal for single-sided documentation like sales contracts, HR forms, and the like.

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Because it isn’t integrated deep into your workflows or technology stack, an eSignature app can be up and running as soon as you’re able to get your staff trained on it. While this solution means you don’t have to have any IT or development resources on hand, it also means you’re forfeiting the ability to customize the workflow and add your own branding. 

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API

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‍To seamlessly embed an eSignature experience right into your workflow, website, or application—we recommend an eSignature API. eSignature APIs increase efficiency by helping businesses create system-generated processes for complex documents like credit applications, account creation, and more.

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eSignature APIs are ideal for organizations with complex, nuanced workflows and medium-to-high transaction volumes. They often offer advanced workflow customization so you can tweak and integrate their functionality to fit even your most unique processes. While an eSignature API isn’t a plug-and-play solution like its web-based counterpart, a trustworthy provider should have SDK information, clean documentation, and developer-run support to help get your integration up and running smoothly.

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Integrations and Extensions

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eSignature integrations and extensions help you get business done more efficiently by moving information between services and automating actions without you ever having to leave the app in which you’re working.

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With an eSignature extension, you can grow the functionality of the business systems your employees are already using. When implemented into your user-facing workflows, they can help customers get tasks done faster—which is something we can all appreciate!

Whatever you choose, Dropbox Sign has a deployment option for you—and none of them skimp on the security, compliance, and ease of use for which we’ve come to be known.

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Pssst, interested in which deployment option is right for you? Get the full scoop here.

What Else Can Dropbox Sign Do for You?

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So, how’d we do? Did you get all your eSignature software questions answered? If not, leave your question in our comments. And if we did answer all your questions—awesome! Sounds like you’re ready to take the “overall best” software solution for a spin.