It will happen to everyone eventually...A bride will cancel her wedding. This leaves her vendors in the position of deciding what they should do and how to handle things on their ends.
Almost four years ago I wrote about this exact thing, but a friend recently went through this with one of her clients so I thought I'd add a few more thoughts.
First, have a policy in place about deposits and what is and isn't refundable. Non-refundable deposits are just that. They reserve a date and make you turn away other business. They also pay the cost of the time that you put in for meetings, emails, sketching, paperwork and planning. So always have something in your contract about what's refundable at what point in the process and what isn't.
Let's say a bride emails you to say that she's cancelling. The first thing you should do is make sure it came from the email address you've been using to communicate with the bride. I had a bride whose sister thought it would be hilarious if she cancelled a bunch of things that her sister had booked, including the honeymoon. So never take one email or a vague phone message as a verification of a cancellation. No matter how uncomfortable it is, speak to someone in person, whether the bride or her mother. Even calling the venue to see that they spoke to the bride or her mother would be better than nothing. Be sensitive, but you need to make sure that the reception is, indeed, cancelled.
Always get a cancellation in writing, though, so make sure that they email you eventually for your records!
When you decide on what should be refunded, any refunds should go to the person who made the payment, preferably in the same form that they paid you. Write a check if it was a check payment, or issue a paypal or credit card credit if that's how they paid you, It makes the paper trail much simpler to follow, and you don't want to get involved in a family fight about who got repaid if you refund to the bride when it was her parents who paid you originally.
What about the worst-case scenario? The cake is baked and decorated (or almost decorated) and you get the call. That's the worst...But you have to do the same thing. First verify the cancellation, check with the venue to make sure the event was called off, and get it in writing from the bride or her parents. Be careful not to ask personal questions no matter how curious you are about why she called it off, and keep the conversation professional and kind...She doesn't need to hear "You're better off cancelling before it's too late" right at that moment.
You can ask if they want to donate the cake to a local charity and offer to deliver it there and send them a receipt. The Ronald McDonald House, homeless shelters, and other groups are always willing to accept donations for the people who are staying there. They can send the family a receipt directly.
Some people will still want the cake. I had one bride who cancelled the wedding AFTER the rehearsal dinner when a few unsavory facts about her fiance came to light. The cake was ready to be delivered, but I unassembled it so that it was individual tiers and brought it to the hotel where her 150 out-of-town guests were staying. I guess they served it, but at least it didn't look like a tiered wedding cake to add insult to injury.
In cases like that the cake has been paid for and made, and there should be no refunds. But all of that should be covered in your contract in the section covering cancellations. If you don't have one of those sections in your contract, put one in right now. You may never need it, but when you do you really do.
And finally, if you're ever in a position where you have a wedding cancellation after the cake was paid in full, but before you've done any work on it, consider bending the rules in the spirit of not rubbing salt in the wound. Refund some of what they paid you after your time and expenses up to that point are covered. If you can't do it then don't, but if it's two weeks before the wedding and you haven't done any gumpaste flowers or ingredient shopping for it, consider it. Sometimes it's just good karma to throw some kindness to someone when they're having a crappy day.
Kara Buntin owns A Cake To Remember LLC, online cake supplies at www.acaketoremember.com and www.acaketoremember.etsy.com