Our business cancellation policy or clause in your terms and conditions are essential for business
operation. If your customers cancel and you spent money and time only to lose it, it may be a
good idea to consider a clear cancellation policy. You can include this in your terms and
conditions, and include what fees the customer will need to forfeit if they cancel.
For example, suppose a customer does not turn up to their appointment or needs to cancel a
booking at short notice. In that case, the purpose of a late cancellation fee is to recoup some of
the lost revenue you would have received if the customer attended their appointment or went
ahead with their booking. You must inform customers of when they can cancel an appointment
or booking without incurring a fee. This article will explore some essential things you should
consider and include in your cancellation policy.
When Your Business Needs to Cancel
There may be circumstances where you may need to cancel the delivery of your services to
customers. If you need to cancel, you must include this clearly in the cancellation policy or terms
and conditions. In addition, you will need to clearly state what will happen to your customer’s
booking if you cancel. Some options you may want to consider include:
trying to book the customer in for another time slot within the next six months and use any
money the customer has paid as a credit towards the next booking;
offer them a refund for any money they have paid; or
offer them a credit for them to use in the next 12 months.
When Your Customer Wants to Cancel
You must clearly state the timeframe within which a customer can cancel without a penalty. You
may want to have a tiered timeframe for cancellation where you may refund a customer for a
portion of the fees they have paid. For example:
outside of four weeks of the booking, the customer will receive a refund of all monies they have
within one to four weeks of the booking, the customer will forfeit their deposit; and
within one week of the booking the customer will forfeit a certain percentage of the fees payable.
You may also want to consider including a provision if something that is not in the customer’s
control causes them to cancel. For example, becoming ill or an emergency arising. If this
happens, you may have a slightly different arrangement that you will need to outline in your
cancellation terms. You can also use your discretion to waive cancellation fees in certain
Is the Cancellation Fee a Penalty?
When considering what cancellation fees are fair, you need to be aware that the cancellation fee
may be seen as a penalty. This is when it penalises one party but not the other. In this case, the
court may deem it to be an unfair contract term. Consumer Law prohibits unfair contract terms,
which can be void and unenforceable. When deciding on an appropriate cancellation fee, you
need to consider the loss your business is likely to suffer due to customer cancellation. The
cancellation fee needs to be a genuine pre-estimate of your loss. This is something you should
also include in your cancellation terms to make it clear that the customer acknowledges that the
cancellation fees are a genuine pre-estimate of your loss.