The execution of legal and administrative documents within asset-based finance is a common task which can be especially voluminous in equipment finance transactions. These documents are important, but often lead to massive inefficiencies and time-consuming back-and-forth activities between lenders, obligors, and guarantors. Whether a lease agreement, loan terms, personal guarantees, or even pre-authorized bank debit agreements, the process for signing these documents using traditional wet-signature methods can be frustrating and seems archaic in our fast-paced digital economy; and with the advent of the COVID-19 pandemic, these tasks become even more laborious, or even in some cases, prohibited the closing of deals altogether. To accelerate the origination process and increase client satisfaction, LeaseSpark is enabling the equipment finance industry to realize the many benefits of electronic signatures (“eSignature”) with industry-leading functionality that is embedded right within a lender’s booking and funding workflow process.
Inefficiencies in Asset-Based Finance with Wet Signatures
Traditional wet signatures have served the lending industry well from inception. However, as the digital economy has arisen and accelerated over the past decade, and now with the “contactless” and remote work necessity of the COVID-19 pandemic, cracks in the foundation of this fundamental practice have become increasingly evident.
The issues with wet signatures can be boiled-down to the following aspects:
- Inefficiency: Any lender who has ever booked a loan, or a borrower who has received a loan knows how frustrating and time consuming the process of signing transactional documents can be. First, a document needs to be printed in multiple hard-copies. These documents are then sent by courier or mail to the borrower, who then sign them, copy them, and send them back to the lender for counter-signature. This process can take days in many cases and is wasteful. This simple act is full of friction points, is frustrating for both sides, and consequentially slows down the deployment of capital or equipment.
- Storage, Recall, and Sharing: Wet signed documents require costly physical space to store originals, which often will lead to the necessity of off-site storage. This then makes the process of recalling the documents for review time consuming and tedious. As well, to share copies of the documents with clients, legal counsel, or other parties, copies have to be scanned and emailed and/or re-printed and mailed. All of this leads to time inefficiencies, additional manual effort, and most notability, exposes sensitive information in an unsecure and unaudited way.
- Competitiveness: Lenders and borrowers are trying to remain competitive in todays fast moving, modern economy. To lenders, this means being able to gain a competitive edge by providing the fastest and most customer pleasing origination experience as possible. While at the same time, borrowers will seek out and utilize financing options that are easy to use, and perhaps most importantly, get them the capital or equipment as quickly as possible. Lenders using traditional wet signature processes will fall out of favor rapidly as the technology becomes more widespread.
What are eSignatures?
Before diving into eSignatures it is important to grasp what exactly they are? Quite simply, it is a stylistic visual representation of a person’s name, usually written using cursive handwriting. However, as anyone who has ever signed a bank check also knows, a signature means something much more. From a legal viewpoint, a signature (either handwritten or electronic) is a method to convey intent or knowing consent to a transaction. The conveyance of intent could just as easily be implied with electronic code as it could be with paper and ink. With that being said, the form a signature takes is merely a matter of technology, since an eSignature is equally valid.
In fact, an eSignature is superior to that of the traditional “wet” form in almost every way. What differentiates eSignatures from paper-and-ink or scanned signatures is that a properly implemented eSignature solution incorporates evidentiary proof of authenticity into the final document, providing all parties with an immutable record of:
- Identities of the signatories: The signatories have been confirmed to be who they say they are
- Intent of the signers: The signatories explicitly intended to sign the document
- Integrity of the document: The document is authentic and valid
The technology behind eSignatures is a well-established ISO Standard and uses sophisticated electronic encryption to secure the integrity of the document using a “digital signature”. Digital signatures are not the same thing as an eSignature even though the terms maybe used interchangeably sometimes. Whereas an eSignature signifies the signer and the intent, the digital signature is the underlying encryption technology embedded within an eSignature document that ensures it is tamperproof after execution. This guarantees the immutability of the signed document, and ensures it can be trusted and enforced.
The eSignature process is simple to understand and begins with a requestor sending an electronic version of a document, or package of documents to a signatory, or group of signatories, for execution. The parties to the agreement then login to the eSignature platform and are authenticated, usually using an email address and/or another mechanism of unique identity, such as an SMS text message with a code, where signees are presented with the document(s) to be signed. Upon satisfaction of review, the parties can “click” to sign, and although it is not necessary to do so, parties can also affix a digital representation of their cursive handwritten signature to the document. Once all the parties have signed, they are each provided a copy for their records. eSignature solutions also offer a methodology to securely store the documents thereby electronically vaulting them for future reference and to ensure that any applicable statutory retention requirements are easily met.
The basic workflow of eSignatures is a multistep process consisting of:
- The entity requesting the signature sending a document for signing
- The authenticated signatory applying their eSignature in the prescribed method
- A fully signed document is stamped with an immutable digital key to ensure it is tamper-proof
- Completed documents are stored within a central archive where they can be viewed, downloaded, and audited
LeaseSpark Document Center – A fully integrated, workflow-driven eSignature Experience
LeaseSpark delivers eSignature functionality out-of-the-box that reduces the inefficiencies and challenges highlighted above, while driving customer success and satisfaction. Fully integrated into both LeaseSpark’s unique SparkFlow customizable workflow utility and its robust document generation and management framework, the product enables an unparalleled experience for both lenders and their clients. This core set of features is included with every LeaseSpark implementation and includes the following capabilities:
- Utilizes the highly secure and legally compliant OneSpan Sign platform which is used by top-tier financial institutions globally. Users have the choice of using their own OneSpan Sign account or may select a pay-per-use model directly from TAO Solutions. Aiming to be platform agnostic, eSignature providers such as DocuSign and Adobe Sign will be added in 2021.
- Provides a branded “white-label” experience with your custom logo embedded within the web-enabled signing ceremony pages for all signatories.
- Directly embedded in LeaseSpark’s powerful document generation and management feature, allowing users to create custom deal documentation in PDF and/or Word templates. Documents can be configured with simple or complex data population rules allowing for complete automation of document creation with all pertinent details of a deal, including financial, collateral, obligor, guarantor, and administrative information. Completed documents are immediately available for eSignature processing.
- Integrated into LeaseSpark’s SparkFlow customizable workflow management system, allowing complete end-to-end rules-based automation for documents to be generated instantaneously, populated with all necessary data, assigned signatories, and dispatched for e-signing without any user intervention. This capability ensures consistent, auditable workflows that are operationally efficient and cost-reducing, with the bonus of greatly minimizing the chance for errors to occur.
- Allows for full configurability of signatories and optionally enforces two-factor authentication using SMS code verification in advance of the signing ceremony to validate intent and identity.
- Provides detailed status overview of the eSignature process from beginning to end. Users will easily be able ascertain exactly who has signed, when they signed, and remaining signatories all from within the deal document management interface within LeaseSpark. Automated alerts for outstanding signatories can be automatically sent to outstanding signatories using the SparkFlow workflow system.
- Enables centralization and long-term storage of fully executed documents right within the LeaseSpark system. Upon completion of the eSigning ceremony, LeaseSpark will download the documents and store them without a user lifting a finger. All deal documents can then be instantly viewed or downloaded from the application at any point in the future.
Experience LeaseSpark eSignature Capabilities Today
Please contact us to experience a live demo of LeaseSpark’s eSignature capabilities and documentation generation and management, or any of the other multitude of features and benefits LeaseSpark can deliver to your asset-based finance origination and administration operations. Contact us today to schedule your demonstration.