5 Strategies To Utilize OCR For Optimum Contracts

Optical Character Recognition is a useful tool for any organization. Learn how to make use of CMS with OCR technology for efficient contract management.

Can you imagine still being stuck in the age of paper contracts and manual data entry? That would be so much work. Thankfully, digitization has streamlined the whole contract management process. We now have contract management software, AI insights, e-signatures, etc. These tools enable organizations to be more productive, efficient, and profitable. 

One such popular technological development is Contract OCR (Optical Character Recognition). It uses a combination of software and hardware functions to mitigate the contract management process. OCR is used in contract management software to convert any images or documents of text into machine-coded text. OCR can turn any physical content like images, PDFs, or handwritten text into usable machine-friendly text. Keep reading to find out does OCR enhances the contract management process.

How does Contract OCR work? 

OCR is gradually changing the way a contract management system works. Without OCR, while organizations can scan and store legal documents, there is not much scope for utilizing digitized documents beyond that. 

CMS (Contract Management Systems) with OCR technology transforms any recognizable characters on a page into usable machine-readable content. Any document—PDF, picture, typed, or written—is converted into a format that is readable, editable, and searchable. It makes any legal document more dynamic and interactive. OCR utilizes the techniques of pattern recognition and feature detection to digitize texts. It enables organizations to automate the entire contract management operation. Any contract-related tasks now can be done online, thanks to Contract OCR. Additionally, OCR using AI and machine learning can assist in distinguishing between various handwritings and languages. Before we discuss how to use OCR for optimum contracts, let us look at the benefits of a CMS with OCR technology.  

Contract Management Software on Microsoft 365

Why is OCR vital for contract management? 

In the past, contracts were manually created, signed, and stored. Naturally, the entire process was time-consuming and lagging. Drafting contracts from scratch, sending them back and forth for negotiation, and so on. But with CMS and OCR, the legal team can create, share, edit, sign, and store contracts from a single platform. Apart from optimizing the whole contract management process, some of the other advantages of Contract OCR include:

  • Save time 

Manual data entry is a long and tiring process. In expanding businesses, the legal or other teams cannot afford to spend endless hours typing, converting, or extracting data for legal documents. But with Contract OCR technology, it is possible to scan legal documents quickly and efficiently. Users can convert any legal file into legible, editable text in a few minutes. The legal team can get a respite from mind-numbing administrative tasks. Moreover, the entire contract generation process is accelerated.   

  • Reduce costs 

Paper contracts are hard to store, share, and edit. Moreover, they cost a lot of time and resources. As Contract OCR makes any image or document machine-readable, there is no need to employ human resources to do contract-related administrative tasks. The OCR contract management software may streamline contract management with little effort, time, or expense. 

  • Better customer service 

OCR contract management software enables organizations to provide the best customer experience. OCR technology allows users to track and collect contract data quickly and effectively. So, if ever a customer asks for some information, the service team will be better equipped to handle the request.  

  • Productivity 

The legal team's productivity will rise when they are not juggling hundreds of administrative contract responsibilities. OCR helps to simplify the contract generation and management process, leaving the legal team free to tackle other important tasks.  

Automated Contract Management System

How can you utilize OCR for optimum contracts? 

It is critical to select a CMS with OCR technology if you want your legal papers to be compatible with online contract management. Going through each contract individually to add, edit, track, or analyze them is an enormous task. And no legal department has that kind of time. As OCR technology makes static documents more dynamic and active, users can effortlessly examine the contracts to identify valued data. And edit documents without repeatedly making new versions. Here are some strategies you can adapt to get the best out of contract management software with OCR technology. 

  • Analyzing and contract reporting 

Contract reporting is an indispensable part of contract management. Even if significant contract data is gathered and stored safely, a business cannot fully profit from this information without analyzing it. But with OCR, the users can quickly track, capture, and report the more vital facts. It enables organizations to analyze and identify opportunities as well as risks. Contract reporting provides the contract managers with insights to enhance the contract management process. Contract reporting ensures that organizations continue to derive value from legal documents even after execution.  

It also helps businesses to identify significant facts such as contract status, deadlines, and other contract milestones. The legal or business team can set automated notifications via CMS using this data. The automated reminders help organizations to optimize the contract management process and to cut avoidable costs. And they are less likely to lose revenue due to delayed contracts. Consequently, efficient contract analysis and reporting will enhance customer relationships.

  • Data Accuracy 

Contract generation and management are labor-intensive operations. And human beings are prone to mistakes. Manually entering information for contract generation means there are bound to be errors. Inaccuracy in contracts only means trouble for the legal team. It vastly affects contract performance, compliance, and customer relationships. No organization wants an avoidable mistake to cost them revenue or clients.  

But CMS with OCR function eliminates the need for manual entry. Users can digitize any legal file into structured text readable by the computer. It enables contract managers to upload contract data with utmost accuracy. Moreover, there is no need to employ human resources for in-depth contract reviews. By automating data entry, OCR guarantees precision without the scope of human error. The legal team can ensure optimum contracts by utilizing OCR for administrative tasks and data input. It means fewer delays in the contract approval workflow and higher compliance. 

  • Automated contract drafting 

OCR-enabled contract management systems can automate any contract-related process. It allows the legal team to draft legal documents much faster than manual data entry. With contract templates and OCR technology, users can edit legal drafts according to their requirements and needs. For instance, the editable feature of OCR makes it easy to add new records or clauses to/from an existing contract. 

OCR enables CMS to share editable drafts in the contract approval workflows. The negotiation and approval process moves notably faster with OCR technology. Thanks to OCR, every approver on the workflow can make suggestions and changes to the contract draft without creating new versions. It makes the entire contract generation process more adaptable to changes and improvements. It also empowers users to employ dynamic questionnaires for contract generation.   

  • Data Extraction  

Digital contracts are the way to go. However, contracts saved as PDFs or images make it difficult for the legal team to locate specific contract data. All digital files are not particularly search-friendly. Contract management software with OCR converts all digital files to searchable texts.  

As a result, the legal team can easily extract necessary information at the right time. Organizations can make the most of their centralized repositories using this searchability feature. You are using valuable data to improve your business and the contract management process, not merely archiving the contracts. The legal and other teams can make timely and well-informed decisions. Thanks to OCR, users can extract data such as dates, names, validity entity counts, risk keywords, clauses, etc.  

  • Improve document management  

Storing countless contracts on paper is a staggering task. Hence, organizations are adopting CMS to create, share, execute, and store contracts. In addition to drafting new legal documents, OCR technology enables the legal team to digitize old contracts and records into searchable and editable text.  

As all the archived documents are searchable, the legal team can sort and save contracts based on their content. The organizations can build a centralized repository with classified legal documents. A well-organized system will make it simpler for the sales team and other teams in the future to obtain valuable contracts or information. Consequently, the efficiency and productivity of an organization are improved. 

By storing legal documents on paper, there is always a chance of data leak or loss. But with CMS with OCR, organizations can save contracts online with the option of editing and sharing. Digitized documents mean it is quicker and easier to retrieve data when there is an emergency or customer request. Contract OCR comes with the benefits of higher data security and shareability.  


Reliability is the best outcome an organization expects from contract management software. That is why Contract OCR is here to stay. With precision and human-level cognition, OCR guarantees an enhanced contract management process. Scalability is now possible for organizations handling hundreds of contracts every day. Integrating OCR technology guarantees efficiency without sacrificing deadlines or accuracy. 

To get the greatest results from your contract management process, get a live demo today. 

Disclaimer: The information provided on this website is not intended to be legal advice; rather, all information, content, and resources accessible through this site are for purely educational purposes. This page's content might not be up to date with legal or other information.
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Written by Deepti Gopimohan

As a creative content writer, Deepti has spent years assisting brands to share their unique voice with audiences, complying with the latest marketing trends and strategies. Her educational background in Literature & Journalism has helped her research and publish content for diverse industries & mediums.
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Reviewed by Naveen K P

Naveen, a seasoned content reviewer with 9+ years in software technical writing, excels in evaluating content for accuracy and clarity. With expertise in SaaS, cybersecurity, AI, and cloud computing, he ensures adherence to brand standards while simplifying complex concepts.

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