Cancellation Policy Can Protect Your Business
Life as a small business owner is one filled with peaks and valleys. There’s the rush received from an influx of new orders. The thrill of payments posting to your account. The disappointment when a customer isn’t happy and the despair when times are slow. Most realistic small business owners recognize that these experiences are not only possibilities, but each is likely to happen at some point. Yet, what so many seem to overlook or fail to prepare for are those pesky last-minute cancellations. The best way to tackle these is with an established cancellation policy.
A well-written cancellation policy is like insurance for a small business in that it protects you when you’re most vulnerable. Concepting and drafting that cancellation policy template is also a lot easier than most people think. If a customer blowing you off has burned your business in the past, you’ll want to read our tips below on creating a simple but effective cancellation policy.
1: Use clear language in the cancellation policy
When it comes to cancellation policies, less is more. The worst thing you can do is include a ton of jargon or legal-sounding writing. It will further complicate what can already be a complex situation. It’s best to keep it short and sweet with a few clearly worded directives.
First, you’ll want to include the timeframe in which the business will permit cancellations. This will vary by business, so before you arbitrarily list a date, think carefully about your processes. Do you make the schedule a week in advance? Or do you inform workers of their shifts or appointments when they arrive for the day? If there is a cancellation, will you incur any additional cost by having a surplus of employees? These are the types of questions to consider. A 24 to 48-hour notice period is relatively standard for many businesses, but you should do what makes sense for yours.
Also, be sure your policy includes the methods in which customers can cancel their appointments. If you have a dedicated scheduler, make sure the policy includes that employee’s phone number. Some companies prefer to receive cancellations in email so that they have a record of the request—that’s fine, but you must communicate this to the customer in your policy.
If you’re not using a digital scheduler, you should be. Check out: Overcome Small Business Software Anxieties, and Get Your Staff on Board.
2: Institute a penalty as needed
One of the most important aspects of any cancellation policy that your business should include is a penalty description. The penalty is a fee you would charge as a result of the customer not abiding by the terms listed in the policy. For instance, if your policy states that you require at least a 48-hour cancellation notice, and a customer calls to cancel the morning of their appointment, the customer would be subject to the penalty.
How you choose to enforce the penalty is entirely up to you. Some companies will opt for a flat fee, while others charge a percentage of what the appointment would have cost the customer. Whatever route you go, make sure it’s explicitly stated in your cancellation policy and given to the customer well in advance of the scheduled appointment.
3: Get written acknowledgment from the customer
No one likes to believe that a customer would be dishonest, but it happens. The only real way to prevent any potential disagreement over the terms of a cancellation policy is to receive written acknowledgment from the customer.
At the time of booking, it’s a good idea to review the cancellation policy with the customer. Once the customer acknowledges and accepts the terms, ask them to sign and date the space you’ve left blank at the bottom of the policy. Also, to show the customer that the policy is a two-way document in which you accept your responsibility of attending the appointment as promised, you should sign and date it as well. Retain the original for your own files, but always remember to provide the customer with a copy for their records. Save any contractual documents, whether it’s a work order signoff, a pre-payment agreement, or a cancellation policy. Holding onto digital files, not paper copies, and tying them to a customer’s profile in your CRM system ensures you have a secure record of your clients’ interactions and expectations.
Bonus: Sample cancellation policy
If these tips seem simple enough, but you’re still not sure how to put it all together, we’ve drafted a sample cancellation policy that you’re welcome to use for your small business. Just copy and paste the text below into a standard word processor to use it for your own business!
ABC Company Cancellation Policy
Thank you for your interest in working with ABC Company! We take our work seriously and are confident that you’ll be satisfied with the outcome. Below, you’ll find terms around our cancellation policy.
Any cancellations made [x] [hours/days/weeks] prior to your scheduled appointment will be subject to a penalty of $[x]. We’re always happy to reschedule appointments for no fee if you notify us in advance of the deadline listed above.
If you do need to reschedule or cancel your appointment, we would appreciate it if you would call our scheduler directly at [phone number]. You can also email us at [email].
We look forward to working with you!
ABC Company Date