I'm not talking about the mechanics but the missing logic behind the system.
In the case of bounty-hunting, i imagine that records of the ships sensor logs would be enough to prove that i really killed all those bad pirates. So when i get destroyed so are those logs, therefore i have no proof and get no money. Thats ok, because like Arry said its all about knowing how long to stick around.
But when i pleged allegiance to my favourite power its more like an employment relationship. They keep records of my 'deeds' in form of those merrits so it is at least comprehensible how much i did. But at the end of the cycle they magically send me a travellers check (instead of just wiring the money to my account) and say "Hey, here is a voucher for all the work you have done. Go get your money. But although we keep records of your merrits and we could technically figure out wether or not you cashed in your check (keep in mind that this is possible today, so its not far fetched or anything) - we just simply will not."
Also, when you did a job for a faction - like killing x-pirates or transporting secret information to another station (those jobs where you will have to go back to station you got them from to receive the money) - when the job is finished you can get killed a gazillion times and the contractee (miraculously) still remembers who you are and what you did for him.
I seriously love this game - and i seriously hate it like no other game i ever played. And so i put up with all the little fu..ed up things, because in sum its still totally awesome. Of course it is my own fault that i did not cash in right away. With the grinding nature of this game it was kind of a mind thing - knowing that i had 50mil in the backpocket while my bank account still was pretty low. But there is no logic behind this particular game mechanic.