Customer paid deposit and now wants to cancel

[Flowerpowerr1]

Hi all I just need some advice I’m new to my cake business, I had a customer who placed a large order with us for a special occasion and also sent a deposit. I obviously used that deposit to order items and because it was a large order I spent quite a lot of money.
Now she’s told us she wants to completely cancel because she can’t proceed with the dates, we’ve suggested if she wanted to keep the deposit for a later date but she said no she wants to cancel.
The event wasn’t until 3 weeks away still
What do I do? Give back all the deposit or give back the amount I didn’t spend I’m really unsure what’s the right thing to do??

A deposit is normally non refundable so it depends on your terms and conditions but is to cover any out of pocket expenses. Not just materials but the fact you've turned down other orders etc to facilitate. I would send a message along those lines to say sorry she is not able to proceed but as per your terms and conditions the deposit is non refundable. You are willing to transfer the deposit to another date should she have one as a sign of goodwill.

Did you say it was no refund deposit when she paid it? If so dont give it back. If not I would say the deposit has been spent on buying things for her order and cannot be returned. Just make it clear in future that deposits cannot be returned

What are your Ts&Cs?

The whole point of a deposit is to cover situations like this where you’ve spent money on ingredients etc. So your T&C should make it clear that it’s a non refundable deposit.

This is why you take a deposit, I’ve never know a small business of this type refund a deposit when it is the customer cancelling.

I haven’t made it clear that deposits are non refundable I wish I did but that is the rule I follow that’s the whole point of a deposit
I think I’ve spent around £40/50.
Would be ok to give maybe the part of the deposit that I didn’t yet spend? I’m trying to be as professional as I can

I've recently had a lot of situations like this as a customer, I had my whole wedding booked and it has been cancelled twice sue to covid. Every single supplier (including cake maker) has offered to transfer to a new date. None are offering return of deposit.

I believe that you should offer them a new date but not a refund. Is this not covered in your terms and conditions?

Do you have T&Cs? If not it's up to you, but I would be inclined not to give it back tbh. And get some set up quickly:)

Why on earth don't you have it in your ts and cs that deposits are not refundable?

Learn from this: make your T&Cs very clear.

As it wasn’t clear this time perhaps pay back what you haven’t yet spent.

I haven’t made it clear that deposits are non refundable

Then I don’t think you can keep it. The customer would need to have been aware of the terms when she ordered.

Do you have any type of cancellation policy that she’s seen?

Explain it's non-refundable but offer another date/save for later. If not then as a gesture of good will you could offer a part refund and in future have a written t&c you can email people.

If you haven’t made it clear from the outset then I would maybe offer part refund and then going forward ensure your terms state that the deposit is non refundable.

I’m wrong, you can keep some - but you can only keep an amount to cover your directly related losses, and you can’t keep any that could be saved by finding another customer or cancelling orders/contracts with other suppliers.

Which link - www.which.co.uk/consumer-rights/advice/can-i-claim-back-a-non-refundable-deposit

I would tell her you have used part of the deposit to buy what was needed but can refund what hasn't been spent as a goodwill gesture also remind her deposit are normally none refundable for any further orders.

I think you deserve to keep the deposit.

However as a new business in quite a popular field you may want to think of the "long game". You say she placed a big order with you, depending how you handle this she may well place another with you in future (especially if her reasons for cancelling this time are genuine and she's not just a time waster).
Small local businesses rely on word of mouth so this is something you may want to think about.

However I think you'd be perfectly within your rights to keep all or some of the deposit.

Oh and for future deffo make the Ts&Cs clear 😊

If you want to remain as professional as possible, I would return the entire deposit because you have not mentioned you will keep it. Even if she hasn't asked for it, be proactive and it will pay off. Treat it as a lesson learned and add it in to your Ts&Cs

If you didn't tell her a deposit is non refundable and you don't have terms & conditions on the back of an order she has signed then I really think you don't have a leg to stand on and need to fully refund her deposit. Chalk it up to a lesson learnt and get your paperwork in order for future orders.

Probably not what you wanted to hear but starting a business is a learning curve

I think due to the fact that she has given you 3 weeks notice and if her reasons are genuine for cancelling then I would offer to refund what you haven't spent and make it clear to her that the amount you have kept is what was spent on stuff for her order which is why you can't refund it. Explain that normally deposits are non refundable but in this case as a good will gesture you will refund the rest. Don't leave yourself out of pocket for the stuff you bought but as a new business I think keeping good relations is important.

As PPs have said, for future orders make clear that there's a non refundable deposit for x amount to secure order. That way you're covered if anyone in future complains

I think I would be honest and say you have incurred cost but can refund the rest, and offer the incurred cost as a discount on her next order.

I work freelance in another field and have TandCs for this, I would also recommend professional liability insurance. What are your TandC is someone has a reaction to the cake, or claims they broke a tooth on a decoration? There are chancers out there. Most clients are honest, but it may be worth checking if you household insurance would cover you or not as a sole trader.

There's a difference between a hobby and a business. Cancellation policies and payment schedules are a really important part of any business. You've learned a useful lesson and it's only going to cost you £40-50 and not hundreds, so be thankful.

Call up a couple of people near you who offer a similar service and tell them you're considering placing an order and ask for their T&Cs. Check them through and then copy them into your own contract if they seem helpful.

I agree, refund the portion you haven’t spent

What have you ordered?

If it's things you'd be reasonably expected to be able to use for future orders, you may not be able to recover all of those costs.

Generally this is going to be a mess because you have no T&Cs. It may well be easier, and do more for your reputation, to refund the deposit and move on.

Explain that its non refundable due to already purchasing ingredients/materials. But happy to move to another date. Thats professional and fair. For future reference, explain that the deposit is non refundable. Good luck with your business.