Equipment leasing and finance leaders will see brisk business this year, predicts the Equipment Leasing and Finance Association (ELFA). U.S. organizations are expected to outlay more than $1.8 trillion on capital goods in 2021, with capital spending pegged to grow 7.8%.
And with the Federal Reserve committed to keeping interest rates at or near zero for the foreseeable future, the eight in 10 organizations that rely on leasing and financing for equipment acquisition should be active indeed.
One other ELFA projection? “Digitalization will be pervasive in the post-COVID equipment finance environment.”1 The digital adoption driven by remote work and contactless transactions will only accelerate as firms realize cost and productivity advantages and as customers demand the speed and convenience digitization offers.
Digitization can transform equipment leasing and finance end to end. But the transition often begins with eSignatures. Whether you’re just starting out or far along your digital journey, understanding the laws, technologies and best practices around eSignatures is crucial to your success.
Authentication, Signed and Digital
eSignature is an electronic symbol, sound or process attached to, or logically associated with a contract or other record and executed or adopted by someone with the intent to sign the record. Parties to the transaction sign electronically, either in person using an electronic signature pad or other signing device, or remotely by logging in to a secure portal.
An eSignature is more than simply a scanned, digital version of a “wet” ink signature. The keys to enforceable eSignatures are attribution, intent, and authority. The goal is to authenticate that if Jane is a party to a leasing contract, it was truly Jane who signed it. Authentication methods include username and password, answering security questions, two-factor confirmation through text message, and biometrics such as fingerprints or facial recognition.
Actually, the authentication aspect of eSignatures offers distinct advantages over wet signatures. In a traditional process, when Jane signs a lease, how do you ensure it’s truly Jane’s signature? Maybe a salesman witnesses the signing, or in some cases, a notary. Yet if Jane later disputes the signature, it can be challenging to prove in a court of law that she signed it.
But with an eSignature, you have an authentication method in place. So you have evidence to prove that Jane is Jane, and that she signed the contract. And there’s already substantial case law that supports the validity of eSignatures.
Building on the eSignature Foundation
In fact, the legal groundwork for eSignatures was laid two decades ago through two key pieces of legislation:
- UETA – The Uniform Electronic Transactions Act (UETA) of 1999 proposed uniform rules for states to treat eSignatures as legally equal to wet signatures. The model has been adopted in all states but except New York and Illinois, which use a different approach; Illinois currently has bills related to UETA adoption pending.
- ESIGN – The Electronic Signatures in Global and National Commerce (ESIGN) Act of 2000 authorized the use of eSignatures for transactions between parties in all jurisdictions where federal laws apply.
Now, what happens after you sign a leasing or finance contract electronically? Do you simply print it out and store it in a paper filing cabinet? Or do you store an electronic document and maintain it digitally?
Full-blown eLeasing builds on eSignatures with eChattel paper. And as with eSignatures, eChattel is not simply a scanned, digital version of a paper lease. Instead, it’s a Digital Original® document stored in an eVault. The eVault must reliably establish the person to whom the single, authoritative copy is assigned, issued, or transferred.
eChattel is also governed by a legal framework. Uniform Commercial Code (UCC) Section 9-105 requires that eChattel be created, stored, and assigned to meet six stringent Safe Harbor provisions, including ensuring an authoritative copy, assignee identification, secured party modification, and copy identification.
The eSignature Payoff
Investing in the new technology and processes needed for eSignatures can pay off for equipment leasing and finance leaders in a variety of ways:
- Faster, easier processes – Implemented effectively, eSignatures can slash the time to complete document signing from hours to mere minutes.
- More accurate methodologies – eSignature solutions enforce workflows that make sure parties to a lease contract can’t move on to the next page till they’ve signed the preceding page properly. So, you can avoid errors that would otherwise have to be corrected later. In fact, some firms have offset the cost of eSignatures simply with what they’ve saved in overnight-delivery charges.
- Higher customer satisfaction – Customer demand for remote, contactless transactions will continue long after the Covid-19 crises is over. With a digital-enabled process, parties to a contract can electronically sign documents from virtually any location, quickly and easily.
- Competitive advantage – A growing number of your customers, not to say your employees, have grown up doing everything digital. Stakeholders will increasingly expect equipment leasing and financing to be digitized end to end. Firms that move forward will be positioned to gain market share. Laggards will be left behind.
In the face of a global pandemic, companies that pivoted to eSignatures proved they could be implemented quickly, affordably, and effectively. Now that businesses are rebounding and equipment leasing and financing is primed to surge forward, industry players should recognize and act on the reality that eSignatures are the future.
Understanding the laws, technologies, and best practices around eSignatures is crucial to your success. Our open ecosystem supports integrations with all the major providers, so we can plug-in with as much or as little support as you need. For a discussion on how eSignature can benefit your business, schedule a meeting with one of our product experts here. Our open ecosystem supports integrations with all the major providers, so we can plug-in with as much or as little support as you need.