The number of contracts signed in person decreased by 25% during 2020. This is hardly unexpected given the pandemic and the benefits of online contracts.
Online contracts are contracts that are created and attested online without any use of physical paper. E-contracts allow companies and individuals to quickly and conveniently agree on legally-binding agreements.
They’re almost a staple for companies that frequently enter into agreements with overseas companies or independent contractors. However, there’s no reason for companies not to use online contracts for contracting with domestic companies.
The benefits of an online contract aren’t limited to contracting with entities outside of your city. Entering into online contracts even with parties that are within reach cuts back on time spent on logistics, offers convenience, and puts a few dollars back into your pocket.
This article talks about these and other benefits that improve your business’s functioning in the context of agreements.
6 Ways Online Contracts Offer Value to Businesses
Online contracts streamline the process of entering into agreements for all involved parties. Being able to accept contracts with a single tap removes the long-winding process associated with paper contracts.
Convenience and efficiency are the primary most apparent, but not the only way online contracts offer value to a business. Following are some key benefits that a company wanting to adopt online contracts should consider.
1. Enter into agreements faster with online contracts
Paper contracts take forever. They can ruin a job offer or a client deal simply because of the time they require to create, send, and get back.
Think about it. The company drafts the contract and takes a day to get them posted through mail. The mail reaches the other party, on average, about 2-4 days later.
The number of days that the client will take to go through the mail is uncertain. Then, the number of days the client takes to get other stakeholders to sign are, again, uncertain. Add another day for the signed copy to be mailed back. Throw in another 2-4 for you to finally receive the mail.
The process takes longer than a short family trip to DisneyLand. That’s not the way to do business in 2022.
Paper contracts can potentially result in loss of talent and stalled deals simply because they take what looks like a year. Online contracts are the perfect alternative because they enable the recipient to view and digitally sign the contract in real-time using their phone or computer.
Plus, online contracts also take less time to prepare. You can create a contract agreement template and use it as a boilerplate or choose from lawyer-vetted ready-to-use contracts available online. Essentially, an online contract streamlines the process of entering into agreements end-to-end.
2. Online contracts reduce human error
If the creator of the contract had a long night, they may miss a few blunders while proofreading or may enter inaccurate details.
On the other hand, the person who is supposed to sign the contract may fail to read the fine print while overly focusing on covering the contract with dozens of signatures.
Paper contracts are also more vulnerable to tampering and can result in legal complications down the road. With online contracts, both parties have the option to read and modify the terms over the internet in real-time.
Both parties to the contract have the option to enter data into the contract once. This feature allows consistency throughout the contract and helps minimize discrepancies. Essentially, online contracts allow a more collaborative approach to entering into agreements that can save both parties a lot of time.
3. Online contracts offer better security
There are several opportunities for miscreants to tamper with paper contracts. For instance, paper contracts can be manipulated at the time of creating them, sending them to the other party, or when signing them.
The potential for tampering is what prompts companies to carefully retain the original copy of the agreement, have multiple copies available, and notarize the agreement.
Online contracts restrict the ability to make changes to a document that has been signed. Even when collaborating to prepare the contract, an online contract creation tool limits the ability to make changes to initials or signs.
Online contract tools also authenticate both the contract and the parties to the contract, using encryption. Even if either party tries to tamper with the document, most online contract tools will trigger an alert notifying both parties about the potential breach.
4. Online contracts are cost-effective
Online contracts eliminate the need for printers, cartridge refills, stationery, and extra cabinet space. These are the costs that you eliminate right off the bat. But there’s more.
You don’t need to mail the contract to the client or spend time following up. You can let your legal department focus on more productive things rather than skimming through contracts for potential discrepancies.
Plus, you save yourself the ordeal of having to bite your nails until you finally receive a signed copy of the document. You and your business partners will save yourself and the staff plenty of time and save the business a lot of money simply by switching to electric contracts.
5. Your customers will love online contracts
Step into your customer’s shoes for a moment. How would you like to sign a 20-page contract, page-by-page?
Online contracts make life easier not just for you but also for your customers. E-contracts can be signed in a jiffy. An online contract tool will typically have a feature that allows the customer to sign on one page and auto-populate the rest of the pages with the signatures.
Instead of waiting for the contract in the mail, customers can directly sign it using their phone or computer. A lot of customers lack the patience to wait for the contract to arrive at their place through mail.
E-contracts are a perfect solution for them. Many tools will also allow the customer to sign the contract simply by clicking on an “I agree” button. Could it be any easier?
6. Track, search, and keep an eye on data
Remember that one time when you had to sift through countless pages of a contract to find that one term or a typo you had made and thought about right before going to bed? Now, think about how that would have gone if you had several versions of that contract? Ouch.
On the contrary, things would have been smooth sailing had you used an online contract. With an online contract tool, you can search for words, phrases, or numbers used in all your contracts at once.
You can compare terms among contracts, refer to similar terms used in a previous contract, or compare the multiple versions of a contract within minutes.
Think of the time and effort that will save you or your team. The more contracts your company enters, the more valuable an online contract tool will be for your company.
Can All Contracts Be Online Contracts?
Most concerns surrounding online contracts circle back to their validity in the context of contract law. Yes, online contracts are acceptable and legally binding in most cases and almost all jurisdictions.
However, there are a few exceptions where online contracts can’t be used. The law doesn’t accept online contracts for certain agreements to protect the consumers from becoming a victim.
For instance, divorce and adoption contracts should be strictly on-paper contracts. Whenever you want to cancel your life or health insurance benefits, you’ll need a paper contract.
All court-issued documents such as motions, notices, and pleadings must be issued on paper. A notice of discontinuing services from a utility company must also be on paper.
These are a few of several examples where online contracts can’t legally bind two parties. However, notice that these are mostly non-B2B scenarios. Online contracts are valid in almost all cases for businesses, though there may be some jurisdictional variation depending on where you’re located.
There’s no reason not to ditch paper contracts and transition to online contracts for most businesses. They come with a long lineup of benefits that are hard to say no to. In a world that’s quickly digitizing and dealing with a pandemic, online contracts are almost a necessity for many businesses.
Any company that does business with overseas clients will need online contracts to conduct business. However, it’s not just them. E-contracts also offer tangible value to D2C brands in the form of improved convenience for customers.
The handful of instances where online contracts can’t be used are typically areas that aren’t relevant for most businesses.
While it’s always a good idea to have a lawyer ensure that an online contract is valid for the context you’ll be using it in, it’s unlikely that you’ll frequently need to switch between paper-based and online contracts for day-to-day business.
Only when you switch to online contracts can you realize the full spectrum of benefits it offers. So, when creating your next contract, give e-contracts a go and see how much time and money you save. If you’re not impressed, you can always return to paper contracts.
Author Bio: Arjun Ruparelia
An accountant turned writer, Arjun writes blog posts for B2B brands across the globe. Arjun has five years of writing experience across verticals. He is a CMA and CA (Intermediate) by qualification.
Open Business Council offers resources, Trade Finance, business advice, SME Finance and a forum and directory for businesses! Improve your business and use the best digital, financial and funding tools to grow ROI – return on investment and ROA – return on attention!