What is a referral fee, who pays it and when is it earned?

What a referral fee means

A referral fee is money paid to a person or firm for introducing a customer, client or deal to a business that then wins paid work from that introduction. The payer is the business that gains the customer. The recipient is the introducer, who usually does no selling or delivery beyond making the connection.

Every referral fee comes down to three terms: who pays, which event earns it, and how the amount is calculated. Most arguments about referral fees start because one of those three was never written down, which is why a referral fee agreement settles them before anyone makes an introduction.

Who pays a referral fee, and who receives it?

The business that wins the customer pays, and the person or firm who made the introduction receives. The referred customer normally pays nothing extra for the introduction.

In B2B work the payer is often a service provider or platform that earns its own fee on the deal and shares part of it with the introducer. The SourceX partner program works that way: a partner's reward is a share of the fee SourceX collects, so it is never deducted from what the referred company receives.

How are referral fees usually structured?

Structures vary by industry and deal size. The calculation base matters more than the headline rate, because it decides what you are paid on.

For typical amounts, see how much a referral fee is for a B2B introduction.

When is a referral fee actually earned?

A referral fee is earned when the trigger event named in the agreement happens. In B2B programs that is usually a paid deal, not the introduction. Most programs follow the same sequence:

1. Introduction. The referrer connects the prospect through a referral link, a form or a direct email.
2. Attribution. The payer records who introduced the prospect first, often within a set attribution window.
3. Qualification. The payer checks whether the prospect fits its criteria.
4. Contract. The prospect signs with the payer.
5. Collection. The customer pays and the payer receives its revenue.
6. Payout. The referral fee is paid on the schedule the agreement sets.

In the SourceX program, a lead, a meeting or even a signed agreement does not trigger a reward; it becomes payable only after the buyer pays and SourceX receives its fee.

Illustrative example: one introduction, three parties

Illustrative: Dana is a fractional CFO. One client, Larkspur Route Software, is a fictional logistics software company with 140 full-time employees at peak and a decade of support tickets, CRM history and engineering records. Dana mentions that some companies license operational records to AI developers and, with the CEO's go-ahead, sends SourceX's application through her referral link.

SourceX reviews Larkspur's size, history, data breadth and rights; the company builds a data inventory, agrees price and terms, and signs once a buyer selects the data. Dana's reward is a share of SourceX's fee, paid after the buyer pays. Larkspur receives the same amount whether or not Dana was involved.

Referral fee vs finder's fee, commission and bonus

People use these terms loosely, but they describe different roles and carry different risks.

Buyout firms have their own customs for finders, covered in the guide to private equity finder's fees, and sell-side advisers handle M&A referral fees differently again.

How does a B2B introduction reward differ from a consumer bonus?

A consumer bonus pays for a sign-up; a B2B introduction reward pays for access to a decision-maker and a deal that can take months. With SourceX, the person who introduces an established US company earns a share of the platform fee only if that company licenses its data and the buyer pays.

• Who you introduce: a US company with 50+ full-time employees at peak (contractors excluded), a multi-year operating track record, clear rights to its own records and a sponsor who can sign.
• What you do: make the introduction and share basic fit information. You never handle the company's records.
• What earns the reward: a closed and paid licensing deal, not a sign-up.
• How it is calculated: partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. No reward is guaranteed.

The rewards page sets out payout conditions, and the referral earnings calculator shows how the published formula works.

Tax and disclosure basics

Referral fees are usually taxable, and some recipients must disclose them. The IRS treats amounts you receive as income unless a law specifically excludes them (IRS Publication 525). A US business that pays an independent contractor may have to report the payments on Form 1099-NEC, as the IRS explains in reporting payments to independent contractors; the page on Form 1099 for referral fees goes further.

If you recommend a business publicly while it pays you for referrals, FTC staff guidance says the connection should be disclosed clearly and close to the recommendation (FTC Endorsement Guides FAQ). Licensed professionals face added rules. Lawyer rules on referral payments vary by state, as the ABA's comparison of state Rule 7.2 versions shows. CPAs in public practice should read the AICPA commissions and referral fees rule, which bars them for clients the firm audits or reviews and requires disclosure of permitted fees, and then check their state board.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

Next step

If you know an established US company with years of operational records, register as a partner and make the introduction with your referral link, or send the owner straight to sourcex.si/apply.