Authorized signatories or signers are individuals who have the legal power to bind an organization to contracts, agreements, or transactions. They are often senior executives, board members, or authorized representatives of the organization. Managing authorized signatories or signers is a critical task for any business, as it involves ensuring that the right people have the right level of authority, and that the signatory records are accurate, up-to-date, and compliant with the relevant laws and regulations.

However, managing authorized signatories or signers is not without risks. In fact, there are many potential pitfalls that can result in serious consequences for the organization, such as financial losses, legal liabilities, reputational damage, or regulatory sanctions. In this blog, we will discuss the top five risks associated with managing authorized signatories or signers, and how to avoid them.

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Top 5 Risks

Risk 1: Unauthorized or fraudulent signatures

One of the most obvious and serious risks is that someone who is not authorized to sign on behalf of the organization does so, either by mistake or with malicious intent. This can happen if the signatory records are not updated regularly, if the signatory verification process is weak or nonexistent, or if the signatory documents are not stored securely. Unauthorized or fraudulent signatures can expose the organization to unwanted obligations, disputes, lawsuits, or fines.

To prevent this risk, the organization should have a clear and consistent policy on who can sign what, and under what circumstances. The policy should specify the types of documents that require signatory approval, the levels of authority and delegation, the signatory verification process, and the signatory revocation process. The organization should also maintain a centralized and secure database of signatory records, and update it whenever there is a change in the signatory status or information. Moreover, the organization should conduct regular audits and reviews of the signatory records and documents, and report any discrepancies or anomalies.

Risk 2: Inconsistent or outdated signatory information

Another common risk is that the signatory information is not consistent or current across different systems, platforms, or jurisdictions. This can happen if the organization has multiple signatory databases, if the signatory records are not synchronized or integrated, or if the signatory information is not updated in a timely manner. Inconsistent or outdated signatory information can cause confusion, delays, errors, or rejections in the signatory process, and affect the validity or enforceability of the signed documents.

To avoid this risk, the organization should have a single source of truth for signatory information, and ensure that it is accessible and accurate across all the relevant systems, platforms, or jurisdictions. The organization should also have a standardized and automated signatory update process, and communicate any changes in the signatory information to all the relevant parties, such as internal departments, external partners, or regulators. Furthermore, the organization should monitor and track the signatory information and documents, and verify their compliance with the applicable laws and regulations.

Risk 3: Lack of visibility or control over signatory activities

A third risk is that the organization does not have enough visibility or control over the signatory activities, such as who is signing what, when, where, and why. This can happen if the organization does not have a comprehensive and centralized signatory management system, if the signatory process is manual or paper-based, or if the signatory reporting or analytics is inadequate or missing. Lack of visibility or control over signatory activities can lead to inefficiencies, errors, fraud, or non-compliance in the signatory process, and affect the performance or accountability of the organization.

To mitigate this risk, the organization should have a robust and integrated signatory management system, that can capture, store, manage, and analyze all the signatory data and documents. The system should also provide features such as workflow automation, electronic signatures, alerts and notifications, audit trails, and dashboards and reports. The system should enable the organization to streamline and optimize the signatory process, enhance the signatory security and compliance, and improve the signatory visibility and control.

Risk 4: Inadequate or inefficient signatory training or support

A fourth risk is that the signatories or the signatory managers are not adequately or efficiently trained or supported in their role sand responsibilities. This can happen if the organization does not have a clear and comprehensive signatory policy or procedure, if the signatory training or education is insufficient or outdated, or if the signatory support or assistance is unavailable or unresponsive. Inadequate or inefficient signatory training or support can result in signatory errors, misunderstandings, or non-compliance, and affect the quality or reliability of the signed documents.

To overcome this risk, the organization should have a clear and comprehensive signatory policy or procedure, that defines the signatory roles and responsibilities, the signatory process and requirements, and the signatory best practices and guidelines. The organization should also provide regular and relevant signatory training or education, that covers the signatory policy or procedure, the signatory system and tools, and the signatory laws and regulations. Additionally, the organization should offer timely and effective signatory support or assistance, that can address the signatory queries or issues, and provide the signatory feedback or suggestions.

Risk 5: Non-compliance with signatory laws or regulations

A fifth and final risk is that the organization does not comply with the signatory laws or regulations, that govern the signatory authority, validity, or enforceability. This can happen if the organization is not aware of or updated on the signatory laws or regulations, if the organization does not follow or implement the signatory laws or regulations, or if the organization does not document or demonstrate the signatory compliance. Non-compliance with signatory laws or regulations can expose the organization to legal risks, such as penalties, sanctions, or litigation.

To eliminate this risk, the organization should be aware of and updated on the signatory laws or regulations, that apply to the organization's industry, location, or operation. The organization should also follow and implement the signatory laws or regulations, and ensure that the signatory process and documents are compliant with the signatory standards and expectations. Moreover, the organization should document and demonstrate the signatory compliance, and provide the signatory evidence or proof, such as certificates, attestations, or audits.

Conclusion

Managing up to date authorized signatories is crucial for any organization that wants to avoid the risks and costs of signatory errors, delays, disputes, frauds, or non-compliance. By keeping track of the signatory status, roles, responsibilities, and changes of the authorized signers, the organization can ensure that the signatory process and documents are accurate, efficient, secure, and compliant. However, managing up to date authorized signatories can be challenging, especially if the organization has a large, complex, or dynamic signatory structure, or if the organization operates in multiple jurisdictions or industries.

At Aptly, we have developed an application that solves the pain of managing authorized signatory lists, making it secure and efficient.  With Aptly, an organization can easily create, update, and monitor the signatory policies, procedures, and records, and assign, delegate, and revoke the signatory authority and rights of the authorized signers. Aptly also provides the organization with the signatory tools, templates, and resources, that simplify and automate the signatory workflow and documentation. Moreover, Aptly ensures that the signatory process and documents are compliant with the signatory laws and regulations, that apply to the organization's industry, location, or operation, and that the signatory compliance is documented and demonstrated. You can save over 90% of their admin costs and time, whilst mitigating the risk of fraud for the organization.

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