Palette Software - Monterro.com

Success story

Palette Software

Finding Palette’s true colours

A snapshot

Palette Software is a Swedish provider of Accounts Payable services. Its market-leading platform automates interactions such as: capturing invoice data, approvals, PO matching, requisitioning, purchasing, budgeting, and analytics. It currently serves over 2,500 clients and has more than 250,000 users worldwide. 

But it’s been quite a journey to that point. 

Jumping the growth barriers

Palette was doing great things for its customers and exploring new markets for international expansion. But there were big obstacles hindering its growth. Profitability was scarce, its offering was not scalable, and new opportunities dictated business direction. 

“It felt like we had all – or nearly all – the pieces of a great business, just not in the right order. So we started looking for an investment partner who could take us to the next level”, explains Palette’s CEO, Mats Ferm.

Striking a partnership

For Monterro’s Managing Director and Co-founder, Thomas Bill, the decision to partner with Palette was easy. 

“They had great people, their customers were really happy, and they were operating in a space that we knew had great potential”.

But the acquisition didn’t happen overnight. As with all of Monterro’s portfolio companies, partnership with Palette was an evolution rather than a lightning strike. 

“We knew Palette long before we partnered because we were actively cultivating relationships in that space”. 

 

Palette Software

Investment year: 2015

Divestment year: 2021

Area: Accounts Payable

“Monterro made sure we didn’t get over excited when things went well, and they had our backs when things seemed bad. They guided us but never took away our autonomy”.
Mats Ferm, CEO of Palette Software

How Monterro helped Palette grow

Switching from on-prem to SaaS was a natural first step.

Monterro started by rationalising Palette’s offering away from heavily-customised consultancy contracts and towards a cloud-based platform, built on a software as a service (SaaS) model. 

This meant turning down some lucrative opportunities, which Ferm admits was hard. 

“When you’re struggling for profitability, turning down contracts is difficult. But Monterro have been here before, and helped us see that this ‘next contract’ thinking was really holding us back”. 

Monterro helped Palette develop a clear product vision that honed into the strongest area of the business – and the market. This allowed Palette to move towards a market-led approach, a predictable revenue cycle, a scalable offering and ultimately, a profitable business model. 

But it wasn’t all plain sailing. 

Sensitivity not sentiment

As with any path to long-term growth, Palette experienced some successful quarters and some that were less so. As Ferm explains, the strength of their relationship with Monterro was crucial during these times. 

Bill believes this approach comes from the Monterro leadership team’s experience as CEOs in their previous companies. 

“We’ve all been on the other side of the table. We hated when a partner came in and just took control. So we collaborate with our portfolio companies to reach our goals together. Of course, differences of opinion happen, but with a culture of listening and respect you can always create a positive outcome”.

Crucial steps forward

  • Full market approach: Palette had developed a great offering for larger organisations. With Monterro’s guidance, Palette acquired Centsoft – an invoice automation specialist. This allowed them to cater for the needs of small and medium sized businesses too.
  • United messaging: Censoft’s services were gradually incorporated into Palette’s product portfolio. From there, a unified messaging strategy was launched – one company, with two routes to success.
  • Remounted internationalisation: With a scalable offering in place, Monterro reignited Palette’s international expansion in the US to great effect.

Key before and after differences for Palette

  • Scalable SaaS business model
  • Predictable revenue cycle
  • Big international footprint 
  • Total market coverage

Advice to businesses in Palette’s position

Mats Ferm:

“Don’t drag your feet when seeking an investor. Want to get to the next level? Start looking for the right partner sooner than you think”. 

Thomas Bill:

“Draw up a clear product roadmap and have the guts to chase customers that fit your vision rather than those offering quick wins”.

Growth in figures

25%
ARR CAGR
<0 ⇾ 10%
Adj. EBITDA (year 2015-2021)
85 ⇾ 118
Amount of employees
81%
% Recurring revenue of total revenue

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