A referral partner is a person or business that sends you clients and is rewarded when those clients buy, usually with a referral fee. In the UK the role is often called a business introducer, and in deal-making a finder. The partner makes the introduction, and the sale, the contract and the client relationship stay with you.
Key takeaway: Choose partners who already serve your clients, agree the fee and its trigger in writing, pay on the agreed date and tell partners what happened to each introduction. Rules change by sector and country, so check them before you offer a fee in financial services, real estate or legal services.
What a referral partner does
A referral partner spots someone who needs your service, checks they are happy to be introduced and passes their details to you with some context. From there you take over: you qualify the lead, make the offer and sign the client. The partner does not negotiate for you or commit you to anything.
That limited role separates a referral partner from an agent or a salesperson, who negotiate and sell on your behalf. Write the limit into your agreement: in some sectors, whether the person negotiates or only introduces decides whether they need a licence.
Types of referral partners
- Complementary professionals who serve the same clients at another moment: an accountant and a lawyer, a mortgage broker and an estate agent, an interior designer and a builder. See how accountants, lawyers and mortgage brokers build these networks.
- Past clients who were happy with your work and are asked at the right moment. Our word-of-mouth strategies cover how to ask.
- Businesses with the same customers, such as a web agency and a copywriter, or a kitchen showroom and an interior architect.
- Affiliates, who promote a product online and are paid per sale or subscription through a tracked link.
How referral partners are paid
The common models are a fixed amount per closed deal, a percentage of the deal or of the first year's revenue, and tiers that raise the rate with volume. Some businesses also share recurring revenue for as long as the referred client stays.
Two terms matter as much as the rate. The first is the trigger: signed deal, invoice issued or payment received. Paying when you are paid protects your cash, and paying at signature rewards the partner sooner. The second is the deadline: say how many days after the trigger you pay, and keep to it.
For typical levels, see the typical referral commission by industry, which comes with a calculator, and our guide on how to set the right commission.
The referral partner agreement
A short written agreement settles the questions that cause arguments later: who the parties are, what counts as a valid introduction, the fee and what it is calculated on, the trigger and the payment deadline, how long an introduction stays valid, confidentiality, personal data, term and notice.
Build a first draft with the referral agreement generator, and read our referral agreement best practices for the clauses people forget.
Referral partner, introducer or finder: sector rules
Many sectors have no specific rules on paying for introductions. A few do, and these are the ones to check first:
- US real estate and mortgages: RESPA allows referral fees between real estate agents and brokers but bans fees for referring settlement services, such as loans, title or inspections, on federally related mortgage loans, and states such as California and Texas restrict payments to people without a licence. See real estate referral fees.
- UK financial services: introducing clients for consumer credit, mortgages or investments can be a regulated activity. See introducer fees in the UK.
- Securities deals: in the US, a finder paid on the outcome of a deal may need to register as a broker. See the finder's fee agreement guide.
- Legal services: in England and Wales, referral fees are banned in personal injury claims (LASPO 2012, section 56), and solicitors must tell clients about an introducer's financial interest (SRA Code of Conduct, paragraph 5.1).
Taxes, in general terms
For the partner, a referral fee is income. In the US, a business that pays a non-employee $2,000 or more in fees or commissions in 2026 generally reports it on Form 1099-NEC (IRS instructions). In the UK, HMRC gives commission as an example of miscellaneous income, and individuals can use the £1,000 trading allowance for small amounts (HMRC helpsheet HS325). A partner registered for VAT adds VAT to the fee unless an exemption applies (how VAT works). In other countries, check with a local accountant before the first payment.
How to find referral partners
- List the professionals your clients deal with just before and just after they need you.
- Search a directory of professionals open to referral partnerships, such as Referaly Finder. Our guide to finding partners with a directory explains the method.
- Go to local business events ready to share your details on the spot, for example with an NFC business card.
- Start with a few partners and add more once the first introductions work. See how to build an effective referral network.
How to manage referral partners
Partners tend to stop referring when they never hear what happened to an introduction, or wait months for their fee. Confirm each introduction quickly, update the partner at each stage and pay on the agreed date. Our list of five mistakes that lose referral partners goes through the usual failures.
Referaly keeps this in one place: each introduction, its status and the fee due, with partners following their referrals from their phone. The free plan needs no card and covers up to 5 leads received and 1 contract. The Independent plan costs €49.90 excl. VAT per month, and the Agency plan €79.90 excl. VAT per month plus €29.90 per extra account, with no commitment and cancellation in one click. See pricing.
Frequently asked questions
What is a referral partner?
A person or business that introduces clients to you and is rewarded when those clients buy, usually with a referral fee. The partner makes the introduction, and you make the sale.
What is the difference between a referral partner and an affiliate?
An affiliate usually promotes a product online and is paid per sale through a tracked link. A referral partner usually knows the client and introduces them directly. Both are paid on results.
How much should I pay a referral partner?
Enough to make an introduction worth the partner's time, and no more than your margin allows. Businesses use a fixed amount per deal, a percentage of the deal or tiers, and our referral fee rates by industry and the calculator on that page help you set a figure.
Do I need a contract with a referral partner?
A written agreement is strongly advised. It settles what counts as an introduction, the fee, when it is due and how long an introduction stays valid. The referral agreement generator gives you a first draft to have reviewed.
Is a referral partner an employee?
A referral partner normally works independently, decides whether and when to introduce someone, and is paid per result. Status depends on the facts: in the US, the IRS looks at the degree of control and independence, such as whether the business controls what the worker does and how. If you start directing a partner's work, take advice on employment status.
Do referral partners pay tax on their fees?
Yes, a referral fee is income for the partner. In the US, a business that pays a non-employee $2,000 or more in 2026 generally reports it on Form 1099-NEC, and in the UK HMRC treats commission as taxable income, with the £1,000 trading allowance for small amounts.
This page gives general information and is not legal or tax advice. Rules differ by country and sector, so check with a qualified adviser before you set up a paid referral arrangement.