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??

Has she asked for the deposit back?
If I was cancelling something, I'd assume my deposit was lost, and not mention it as it wouldn't cross my mind I'd get it returned for changing my mind.
But then when lockdown 1 happened, and we needed to cancel the cattery, having g not paid anything I asked what we owed for a last minute cancellation. Maybe it's me who has things wrong!

Have they actually asked for the deposit back?

Personally, I wouldn't expect a deposit back. I think it would be usual that you keep the full deposit.

If you are trying to be a professional as you can, then the deposit is non refundable.
Add up the ingredients the time it took you to order, plus any other time you have spent at x amount per hour and send her the receipt.
Make sure you add non refundable deposit to your T&C's.

If you have paid out for ingredients, would you be able to use them on another order? if so I think you should give her the deposit back, or what is left of it AND the ingredients/whatever you have purchased that cannot be reused for another order. That would seem fair.

Has part of the deposit paid for your time? thats more difficult

Your only real course of action here is to return the whole deposit. You have no terms and conditions that cover depositors so it's the only right and sensible thing to do.

However, having said that, I'd wait until she brought it up and requested not back of course! And then I'd say that a deposit is normally non refundable but on this occasion you will do so

And then I'd update your policies ASAP and this is one of the absolute basics surely?

I think on this occasion, becauae you haven't stipulated that deposits are non refundable, you should perhaps return the deposit minus the amount you have already spent on ingredients, goods etc for this order. Explain that you will refund the deposit minus the money that you are out of pocket.. But get your T&Cs updated immediately and make it clear that the deposit is non refundable from now on.

Is this customer actually asking for or expecting a refund of the deposit?

You need to make your T&C's clear.

For now I think if you haven't said non-refundable after x time from date booked, then you have to return.

She hasn’t actually said she wants her money back she just said she has to cancel it and doesn’t want to save it for a later date.
I just assume she’s afraid to ask for her deposit and she hinting that I should send it back although she hasn’t said to ..
What’s complicated is my sister is talking to this customer for me because she knows this girl but I don’t know her myself and because my sister doesn’t want to look greedy she wants me to give back all of her deposit which isn’t fair on me

What did you spend the money on? Are they returnable items?

@Flowerpowerr1

She hasn’t actually said she wants her money back she just said she has to cancel it and doesn’t want to save it for a later date. I just assume she’s afraid to ask for her deposit and she hinting that I should send it back although she hasn’t said to .. What’s complicated is my sister is talking to this customer for me because she knows this girl but I don’t know her myself and because my sister doesn’t want to look greedy she wants me to give back all of her deposit which isn’t fair on me

Never mix business with pleasure/family.

Too many complications and people who could take offence

It sounds more like a hobby than a business, On this occasion I would give the deposit back and say it is a gesture of goodwill.

Then take steps to formalise your business which will involve a number of things if you haven't already covered them such as environmental health notification/compliance, food hygiene certification and traceability records, risk assessment and public liability insurance and hmrc notification.

If it is a very casual I was asked to make a wedding cake and favours and was flattered and said yes, then it's a lesson learnt. Better to learn early on before things go really pearshaped.

You can't run a business like this. It's not professional to go through your sister. I'd offer back the part I hadn't spent (if I hadn't turned down work to accommodate her order) but that is a goodwill gesture. I don't see why you need to state that deposits are non refundable, surely that's the point of them - customer cancels you keep it, if you cancel you return it.

Your SISTER is talking to her?
That's really unprofessional. So is not having your terms and conditions set out.

I would say nothing at this point.
Thank her for letting you know and wish her well.

If she wants the deposit back she should ask.