Increasingly, every aspect of business is being conducted online. Gone are the days of face-to-face meetings or drop-ins with your clients. Although some might say that this is a detriment to accounts receivable, it also serves a purpose, allowing us to conduct business with company’s across the globe that we, otherwise, wouldn’t have the opportunity to. Included in the day-to-day business that new technologies afford us to do quickly is electronic signatures.

In accounts receivable, electronic signatures allow us to gain permission on important documents without ever having to meet with a person face-to-face or wait for documents via snail mail or fax. Common accounts receivable documents that usually can use an electronic signature include contracts, credit applications, invoices and purchase orders. How does an electronic signature, however, affect the legality of a contract as opposed to a typical pen and paper signature?

The Uniform Electronic Transactions Act sets forth a national standard on rules and guidelines that can help you to establish your policy for electronic signatures in your accounts receivable department.

  • A signature cannot be denied legal effect or enforceability just because it is electronic
  • A contract cannot be denied legal effect just because some of the record was electronic
  • If a law requires a record to be in writing, it can be in electronic form
  • If a law requires a signature, the signature can be electronic

In addition to these rules, there are three guidelines that need to followed when creating the electronic record.


Before creating the electronic record, there needs to be agreement between the two parties to conduct the transaction electronically. In some states, this guideline will differ on how to go about the agreement. Check to see how your state has handled this situations in the past and be clear, in writing, with your client on how you will conduct the electronic transaction.


Both parties must have a copy of the electronic record. This means your client must be able to keep a copy of their signature on the signed document. This could be completed through the use of a customer portal, which gives instant access to customers of all electronic documents associated with their account.


The most important guideline to follow is establishing a way to attribute the signature the person who committed the signature. This can be more difficult to prove, but can be achieved through the means of unique user id’s to sign a document or password protected pages.
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What other laws should you know to make sure you’re collection efforts are legal?
Read our guide on credit and collections law.