The fee will increase by £100,000 after 20 appearances and an additional £100,000 after 40 appearances, with the final payment of £50,000 made if Smith wins a full England cap, much to the annoyance of Bees chairman Eddie Rogers.
"Southampton refused to negotiate with us and said their offer was on a take-it-or-leave it basis," said Rogers.
"As no other bids materialised from Portsmouth, West Ham or Birmingham, we had to accept it."
£10,000 of that will be used to sign Stuart Nelson of Unibond League side Hucknall Town and Rogers went on to say that the club could not have continued to operate had it not been for the sale of Smith.
"Our fans may be critical of the fee, but it gives us a lifeline to continue," he added.
"Without this £250,000 injection we would have found it very difficult to scrape the money together to keep going by paying wages and interest charges on the bank overdraft which our former chairman Ron Noades is kindly guaranteeing."
The Griffin Park supremo regretted to add that the £10,000 being made available to sign Nelson would be the only funds made available to help the club stave off the threat of relegation, unless the club can land some free transfers or loan deals.
"Unfortunately, the only money we can afford to invest in the transfer market is the £10,000 we are paying for Nelson," he added.
"But we could find the wages if our manager Wally Downes wants to bring someone in on a free transfer or a loan deal."
