I own and operate a company selling products online. A partner is stepping in and wants to sell our product line across it's websites.
However, my company will accept the payments from the buyers. The partner will refer the clients to my website for checkout. My partner will receive a cut from each sales.
He would like a system where there is no possibility of me cheating the numbers and underevaluating the commission he should get.
What are the options?
In the agreements that I work on, the typical approach is that the payee has the right to audit the payer's accounting records. If an underpayment is discovered, the payer pays the underpayment amount plus interest. If the underpayment exceeds X% of the amount due, the payer also reimburses the payee for the cost of the audit.
I don't know whether this approach is feasible in your situation.
Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.
Commonly dealt with by giving them an audit right -- if they think you're cheating, they can come look at your books. If they're right (by more than a few percent), then you pay for the cost of the audit (and sometimes, some sort of penalty). If they're wrong, then they pay.
The simplest option you have is to establish a single fee rate for each referral which you will pay your partner. In this way you have no possibility of cheating since every pass through will be logged by your partner and by you so you can reconcile the lists if necessary.
All other situations would be much more complex to implement and will require you opening up your system to your partner which normally you wouldn't want to do.
Why not simply let the partner collect the retail price directly from the customer and remit the wholesale price to you? You would then only ship goods for which he had already paid you.
Your partner would have to identify clients on his website (at lease get their email address) and follow-up with everyone who is referred to your website with a survey. He can compare those who indicate they made a purchase, with his commissions. This could be used as grounds to file a complaint and have access to your records.
The only perfect solution would involve his website being able to process purchases on your site through some sort of web service. This could be cost prohibitive to both of you.
He's your partner or not? If you have got a partner you should trust in him and he should trust in you. If you don't trust in each other you can't be partners.
Screenshots of websites can be fake but if you're partner is not extremely technical he'll trust in them more than anything else. So show him what amount of money you've got from each client. (Best are screenshoots of clickbank or paypal accounts)
Using ePayment systems like http://webpayments.fi will be good if you want to prevent cheating but you often need to pay a little fee.