Here's the awkward situation of the month...What do you do when your client doesn't pay you?
I know what I do, I don't turn the oven on. I require everything to be paid in advance so that there isn't any kind of question at the time of delivery about whether I'll be paid or not.
(I don't place orders without a retainer, and if someone emails to ask about a cake I don't assume that means that they're hiring me. A lot of people seem to treat inquiries like bookings, which is a good way to drive yourself nuts. Unless someone has given you a deposit, they're not a customer yet.)
Now, then...what if the cake is a wedding cake, which carries a little more weight than your garden variety special-occasion cake?
I still wouldn't be baking the cake.
I would make a VERY concerted effort to collect the balance before the wedding, and I'd be documenting everything that I did to contact them, but if there was no payment there wouldn't be a cake. I have this spelled out very clearly in my contract so that there is no confusion.
Luckily, this situation has only come up a few times in the past 15 years. Once I was unable to track the bride down, all of her contact info was out of date. I finally found someone at the reception site who was able to tell me that the function had been cancelled months before. Guess it slipped the bride's mind to tell me.
I recently had a bride who hadn't paid the balance, and didn't return any phone calls at all. Nobody on her contact list returned calls, either. This was slightly troubling, but I once again got in touch with the reception site coordinator, who told me that they hadn't paid for that venue either. Since that was about a week before the wedding date, we decided that they must have cancelled the wedding.
I called and left messages and emailed, saying that there would be no cake, since I had spoken to the venue and was assuming that the wedding had been cancelled.
The day came and went and I still hadn't heard from them. If for some reason I had received a call asking where the cake was, however, I would have told them that it hadn't been made because it hadn't been paid for.
And this is all spelled out in my contract.
Make sure that this situation is covered in your contract, no matter how you decide to handle it. Rare as it is, people do cancel events and just not let you know about it. It's not a matter of if, it's a matter of when.