Are your contract workflows as efficient as the SaaS tools you've embraced? Or are outdated practices still slowing you down?

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Let's face it—nobody wants to lose a big-ticket deal over a misplaced clause or a last-minute legal dispute. Yet, due to inefficient contract management, businesses lose 9% of their annual revenue.

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This inefficiency can lead to unnecessary delays and missed opportunities when closing SaaS deals. One critical element that can make or break a deal is the contract signature.

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Whether onboarding a new SaaS provider or renewing a long-term partnership, perfecting your contract signing process can help you streamline workflows, ensure compliance, and build trust.

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In this comprehensive guide, we'll dive into contract signatures in detail and explore some best practices that every business must know.

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What is a Contract Signature?

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A contract signature is a legal acknowledgment that you understand and accept the terms mentioned in the contract. It is a simple yet powerful act that transforms a mere proposal into a binding agreement with legal and financial implications.

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By signing a contract, you officially confirm that you agree to the terms mentioned in the document and that there's no confusion. If a legal dispute arises, your signature will serve as solid proof of the mutual agreement, protecting both parties from potential breaches.

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Here's why contract signatures matter for SaaS deals:

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• They formalize the agreement process, ensuring both parties are on the same page regarding the contract terms.
• They convert the vendor agreement into a legally binding document, reducing the risk of disputes.
• They protect the interests of both parties, ensuring compliance with regulations like GDPR, CCPA, etc.
• They serve as a sign of commitment, fostering stronger relationships with the SaaS provider.

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You can sign a contract in 4 different ways:

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• Through a face-to-face meeting with all involved parties
• By sending the signed document through physical mail
• Using back-and-forth faxes
• Signing the documents electronically

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Protocols for Signing of Contracts

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Contract signatures aren't just about signing on the dotted line; they seal the deal, show good faith, and set enforceable obligations. However, with evolving business needs and technologies, especially in SaaS-driven workflows, how a contract is signed has become just as important as the actual signature.

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Here are some essential contract signing protocols to ensure clarity, mitigate risks, and avoid costly mistakes:

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1. Understand the Terms and Conditions Thoroughly

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Before you sign a purchase or sales contract, it's important to understand the terms and conditions carefully. Don't just skim through legal jargon—check if every clause aligns with your business needs and regulatory requirements.

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Misinterpreting or overlooking certain clauses can lead to disputes, financial losses, or even reputational damage. 'The contract in itself contains a lot of intricate details, and nothing is useless. The punctuations have meanings and they can either lead you to a catastrophe or make you avoid a dispute or settle the same,' explains Zaheer Abbas Malik.

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So,

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• Make sure the contract outlines measurable benchmarks and timelines.
• Determine the extent of your obligations.
• Verify compliance with regulations like GDPR, HIPAA, or industry-specific standards.
• Carefully understand the auto-renewal and termination clauses.

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2. Confirm if You Are Legally Authorized to Sign the Contract

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We've established that signing a contract is no small task—it involves significant legal and financial implications. Therefore, before you seal the deal, it's essential to confirm whether you—or the individual signing on behalf of your organization—are legally authorized to do so. Otherwise, the contract can become invalid or expose your business to disputes and liabilities.

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So, make sure to:

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• Review approval workflows
• Align with stakeholders for contracts involving multiple departments

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3. Avoid Uncertain Conditions

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Signing a contract is a huge responsibility. Therefore, you shouldn't rush it or sign documents with unclear conditions. Here are some things to look out for:

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• Avoid Signing Contracts with Missing Information: A contract with blanks or incomplete sections is a red flag. For example, undefined financial terms can lead to disputes or unexpected costs. So, make sure all information is clear before signing to avoid any surprises later.

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• Keep an Eye Out for Unfavorable Clauses: If you find terms that don't align with your expectations, don't sign the contract without seeking clarification.

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• Avoid Duress or Coercion: Contracts signed under duress—whether due to threats, pressure tactics, or an imbalance of power—are legally questionable. In such situations, it's advisable to avoid signing the contract until there's a resolution.

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Contract Signing Process

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Now that you know the key protocols for signing a contract, let's understand the process to ensure all details are carefully reviewed, there's no risk, and both parties are on the same page.

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Step 1: Read the Contract Carefully

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We get it—reading a contract can seem daunting. The confusing jargon, legal phrases, and fine print can make you pull out your hair in frustration. But here's the thing: taking the time to read every single line is your first line of defense.

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You see, contracts set the foundation of the legal agreement, and overlooking even the smallest detail can lead to significant consequences. From hidden fees to unclear timelines, understanding exactly what you're signing up for can protect you from unwelcome surprises.

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'If the is ambiguous, unwieldy or ineffective, it could become unhelpful and create acrimony between the parties,' explains Babajide Ogunniyi, Asset Management Director at UPP. 'Look out for key clauses that could materially affect your business, e.g., limitation of liability, payment terms, termination, indemnity, assignment, etc.'

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Step 2: Verify the Signatories

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Okay, let's get one thing straight: not just anyone can sign a contract. The person scribbling their name at the bottom of that page must have the authority to make promises on behalf of the company. Otherwise, you might be in for a world of trouble. Therefore, verifying the signatories is essential to ensure everything is legitimate and hassle-free.

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Check their full names, job titles, contact information (phone numbers, email addresses, etc.), and signing authority to avoid disputes over the contract's validity.

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Step 3: Negotiate the Terms

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Now that you've read the contract and confirmed the right people are involved, it's time to roll up your sleeves and negotiate the contract terms. Businesses often rush through this step, assuming the first draft is set in stone. However, there's always room for negotiation.

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'Prior to signing a contract, it is crucial to recognize that negotiation of terms is a common and often necessary practice. If you find certain terms unsatisfactory or wish to propose modifications, engaging in constructive negotiations with the other party can lead to mutually beneficial outcomes,' explains Mukesh Negi, Lead Customer Service Representative at Circle K.

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Negotiating terms will help you:

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• Ensure the contract reflects your business's best interests
• Clarify any ambiguity about deliverables, timelines, or penalties
• Address common issues before they become a problem
• Make sure both sides are satisfied with the contractual agreements

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Step 4: Select the Contract Signature Method

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The next step is to decide how to sign the contract—will you adopt the old-school pen-and-paper method for physical signatures or use technology for digital signatures?

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Here are some options you can choose from:

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• Wet Ink Signatures: The traditional method of wet ink signature involves both parties physically signing the document with a pen. It is suitable for more formal or high-stakes agreements.

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• Electronic Signatures: An electronic signature is a quicker, more convenient method that allows signatories to click a button to "agree" to terms, type their names into a signature field, or use a scanned image of their handwritten signature. This can easily be done using e-signature tools.

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• Digital Signatures: Digital signatures take electronic contract signing to a whole new level by incorporating encryption technology to add security to the document. They are extremely difficult to alter once signed.

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Step 5: Set a Signing Deadline

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You often have to deal with multiple pressing issues when running a business. As such, it can become easy to overlook contract signatures, causing unnecessary delays in implementation.

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Therefore, send signature requests early and set a clear and realistic signing deadline to ensure both parties are focused and accountable. This will help ensure services, partnerships, or projects begin as planned without misunderstandings or disputes.

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To set an effective deadline:

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• Avoid rushing the process
• Provide ample time for execution
• Communicate the deadline clearly to all parties
• Keep some room for flexibility

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Step 6: Seek Legal Counsel

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Finally, before signing on the dotted line, seek legal counsel if needed. Contracts can often be complicated, hiding potential pitfalls. Therefore, an additional step is running them past your legal team to ensure everything is in order and to protect your business interests.

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A lawyer is well-versed in legal jargon and subtle clauses that might escape your eye. They can help you ensure there are no ambiguous terms or hidden obligations that could lead to potential complications later.

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Barriers to Obtaining Signatures

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No matter how efficient you think your procurement process is, there are several potential hurdles that can delay the contract signature process. From chasing down a decision-maker to dealing with endless back-and-forths over minor revisions, the process can be frustratingly slow. These barriers can delay delivery timelines, strain relationships, and even jeopardize deals.

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Here are some key barriers to obtaining valid signatures that you must look out for:

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1. Data Security Risks

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Data breaches can be a significant risk for electronic contract signing. Contracts often contain confidential information, such as pricing structures, proprietary information, or customer data, making it essential to adopt robust data security standards. To avoid this, use encrypted digital signature tools and educate stakeholders on the security measures in place.

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2. Manual Errors

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From missing signatures to incorrect dates, manual processes are often prone to human errors that can delay or invalidate contracts. A simple way to prevent this is by using automation tools to auto-fill essential details, ensure all required fields are completed, and send email reminders to parties to avoid delays.

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3. Unclear Signatory Roles

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Not defining who is authorized to sign the contract can lead to unnecessary delays and wasted time. Therefore, it's important to define the signatory roles at the beginning of vendor negotiations and communicate them with relevant stakeholders.

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4. Long Signature Cycles

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A complicated workflow or misaligned schedules can often lead to lengthy contract signature cycles. This can impact project timelines or lead to lost deals. You can easily shorten the signature cycle by using electronic or digital signatures and implementing strict deadlines.

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5. Multiple Revisions

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Frequent revisions can slow down the process, frustrating all parties involved. So, it's best to thoroughly review the contract document and negotiate the terms early to prevent unnecessary adjustments at each stage.

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Key Elements to Verify Before Signing a Contract

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Before signing a contract, make sure to verify the following elements:

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• Offer and Acceptance: A valid contract should have a clear offer from one party and an unequivocal acceptance by the other.
• Consideration: Every contract requires consideration. This simply means that something of value must be exchanged between the parties—for example, software, service, etc.
• Capacity: All parties should have the legal capacity to enter a contract. This means they must be of sound mind, not under the influence of substances, and of legal age.
• Mutuality: This ensures all parties share a common understanding of the contract's terms and obligations.
• Competency: The contract's obligations must be realistic and achievable.
• Legality: A contract must be enforceable by the law and comply with local, state, and federal laws.

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Conclusion

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Businesses run on contracts. These legal documents outline expectations and protect the business's interests. However, signing a contract without due diligence can lead to delays and even legal trouble. From understanding the fine print to using the right tools, it's important to optimize your contract signature process to mitigate risks and build stronger vendor partnerships.

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But why stop at just signing smarter? With Spendflo, you can revolutionize your end-to-end SaaS contract lifecycle management.

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• Track and manage all your SaaS contracts and vendor data on a centralized platform
• Ensure faster approvals and onboarding
• Make strategic decisions by optimizing your SaaS spends
• Enjoy guaranteed savings of up to 30% on your tech stack

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Elevate your contract management game with Spendflo. Book a demo today.

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FAQs

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1. What is an electronic signature?

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An electronic signature (e-signature) is a digital method of signing a document. E-signatures can be done by typing a name, drawing a signature, or using a dedicated e-signature platform.

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2. How are signatures and contract acceptance defined by the ESIGN Act and the UETA?

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The Electronic Signatures in Global and National Commerce Act (ESIGN Act) and the Uniform Electronic Transactions Act (UETA) set the legal validity of electronic signatures and contracts. The ESIGN Act confirms that electronic signatures are legally binding, provided all parties agree to conduct transactions electronically. On the other hand, the UETA defines an e-signature as an electronic sound, symbol, or process attached to or logically associated with a document and executed with the intent to sign.

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