Escrow Option for Large Splits with Cash Back Guarantees 

Since fall-offs are on the increase in recent years, conditions around guarantees, replacements, and brokerage are gaining the attention and action of NPAworldwide and the Board.

The  Board of Directors discussed the situation with large brokerages that have extended guarantees requiring a refund of the fee.  The Board understands that member-owners control their own business practices and NPAworldwide does not determine or specify guarantee conditions; however, when splitting with a partner, a replacement guarantee is preferable to a fully refundable guarantee .  If you offer money back, please disclose this to your partner upfront very explicitly.  To increase visibility of the risk associated with money back guarantees, a check box has been added to Matchmaker for “money back guarantees”.

NPAworldwide is not the vehicle to hold funds in escrow from large splits with refund potentials. We recommend the parties to such a large split need to agree in advance on a strategy to handle the potential for refunds and  methods to hold funds until the guarantee is fulfilled.     

NPAworldwide recommends as a provider of this service.  The fees are relatively small and the process fairly simple.  Here is the information from  The wording below is complicated because the Buyer is the Importer and the Seller is the Exporter and the merchandise is the Candidate and the inspection and receipt process is the guarantee fulfillment period, but you will get the flavor or the process. 

How does Escrow Work? reduces the risk of fraud by acting as a trusted third-party that collects, holds and only disburses funds when both Buyers (Importers) and Sellers (Exporters) are satisfied (guarantee period is met).

  1. Buyer and Seller (Importer and Exporter) agree to terms - Either the Buyer or Seller (Importer or Exporter) begins a transaction. After registering at, all parties agree to the terms of the transaction.
  2. Buyer (Importer) pays - The Buyer (Importer) submits a payment by approved payment method to our secure Escrow Account, verifies the payment, the Seller (Exporter) is notified that funds have been secured 'In Escrow'.
  3. Seller (Exporter) ships merchandise (this is the candidate and has already been done) to Buyer (Importer)  - Upon payment verification, the Seller (Exporter)  is authorized to send the merchandise and submit tracking information. verifies that the Buyer (Importer) receives the merchandise (guarantee is fulfilled).
  4. Buyer (Importer) accepts merchandise - The Buyer  (Importer) has a set number of days to inspect the merchandise (guarantee period) and the option to accept or reject it. The Buyer (Importer)  accepts the merchandise (when the guarantee is fulfilled).
  5. pays the Seller (Exporter)  - releases funds to the Seller (Exporter) from the Escrow Account.

Transaction is complete - safely and securely!

From $5,000 to $25,000 the fees are $162.50 + 0.26% of amount over $5000.  So on $10,000 the fee is about 1.75%, on $20,000 the fee is about 1%. 

NPAworldwide believes that an escrow option should be considered when the fee being split is larger than $25,000 ($12,500 each partner) or as agreed to by the members splitting the fee.  On larger fees, $30,000 and up with long guarantees requiring refund of fees, the members must seriously consider such an escrow option. We identified and are making the as a vendor option at the request of one of our members. Again, we are trying to prevent a situation where the exporter or importer is unable to pay back their portion of the required refund. As an alternative to an outside escrow, the importer and exporter can hold the funds in their own separate accounts until the refund clause has expired. Whatever process you use to guarantee the ability to pay the refund should be communicated, and agreed to, between the importer and exporter. The network will continue to consider indemnification requests but failure to use some type of escrow process will be factored into the decision by the board on whether to pay the indemnification.  The indemnification process was originally designed to guarantee the exporters portion of a split fee in the event they were not paid by the importer. Also, indemnification process does not cover payment of the fee if the company is unable to pay. The indemnification is a guarantee process put in place to insure members do not breach a contract with each other.

Times are changing.  It is smart to consider an escrow arrangement on large fees with extended guarantees.  Please feel free to contact me to discuss how to get an escrow started if the information above has been less than clear.