Why Is Optical Character Recognition Essential in Contract Management?


When we read magazines, ads, or this blog posts, our brain starts recognizing the patterns that compose the characters. The computer can accomplish the same thing. Images-based documents can be transformed into a language computer can understand to read the document we require it to. Here is the Optical Character Recognition (OCR) tool used. An OCR tool should be easy to implement in the business software application, which could save companies time.

The first time, OCR technology was created for blind people as a reading device in the 1970s by the firm Kurzweil Computer Products, Inc. The device would scan documents and read out the documents loud. The technology, throughout its creation, has grown into a valuable tool for any business, particularly in the context of contract management software. The imaged or scanned PDF goes to an OCR tool to transform it into a full-text document in the contract management database. After conversion, the system can identify and arrange the text as our brains do.

What Is OCR?

OCR is an abbreviation for optical character recognition, and it refers to the recognition of text. OCR can convert handwritten, typed, or printed text derived from scans of photographs, documents, or PDFs that are image-only.

OCR uses a software amalgamation and hardware to convert printed material into machine-readable text, thus removing the requirement to enter data manually. In addition, OCR utilizes the techniques of automated data extraction and storage capabilities to cut down on time, money, and other expenses.

Suppose OCR is combined in conjunction with Artificial Intelligence (AI). In that case, it will be able to implement advanced techniques that use intelligent character recognition (ICR), including multiple language recognition or recognizing various handwriting styles.

How Does OCR Really Work?

OCR is a beautiful idea, and it can do more than recognize the patterns and words in documents. Apart from that, it could detect inconsistencies in the language used by documents, styles of handwriting, and fonts.

Optimized OCR technology could include pattern recognition or feature detection that helps your computer to recognize various variations of a pattern. This consists of the letters’ shapes. By detecting features, OCR can break down patterns, store the characteristics accurately, and even recognize distinctive elements, such as the handwritten signature.


Benefits of Optical Character Recognition

Easily Add Records to Documents

The copy and paste feature is handy when it comes to transferring information. Text isn’t present if the document is based on images and you want to copy. This could be a problem if you want to quickly add information to create a record within an electronic contract.

The required information is most likely already in the document you’re attaching to your record. A good example of what you can swiftly copy-paste and insert into your contract management system is the contact information for the vendor or the contract’s value.

After the document has been transformed into text, information can be pasted and copied to help create the record within the system. Copying and pasting directly from a signed contract can aid in avoiding mistakes when entering information into the database. The options to copy and paste can eliminate errors in the transfer process and reduce time spent by not having to type all the information again.

Searchable Documents

If a document is scannable or imaged-based, the document isn’t searchable in the contract management sofwtare. This can be a considerable issue when attaching a copy to an existing contact record. While it’s important to find an item, at times, the user will need to be able to look for attachments as well. After the document is processed by an OCR tool, it converts it to text format and compares it to the original imaged-based format. After that, the file can be searched in the system for managing contracts.

Reportable Documents

In addition to the OCR tool that makes the document accessible for search, it also can be reported. In a contract management system, an organization can produce Ad-Hoc reports. These reports are saved searches that employees can make and use to keep track of information like contracts that expire in thirty days.

If a scan or image-based PDF is scanned and then processed by OCR, the OCR software, the document will be utilized in reports. Ad-Hoc reports draw from the searchable text in the systems, such as fields and documents attached with text.


Contract systems are in chaos. Protocols evolve with time. Hard drafts are revised along withdistributed. Additionally, different variants of the same contract are available. The contract management software should be able to effectively interpret a wide range of documents and fields (such as date,Names and boilerplate texts) and types of handwriting and typefaces to ensure that the contract is written in a suitable style and font.

Administrators can access the information they need in a standard, streamlined method.

Final Words

OCR lets the software read and analyze data with greater precision than mostproficient contract administrators. This is why it is a must-have for any business contract management software. But, not every OCR is made equal. Some convert photos into words with more accuracy than other techniques. From growing accuracy and efficiency to increasing efficiency, there is more to optical character recognitionthan meets our eye.