The 3 Components of an Effective Cancellation Policy

Cancellation policy template

Appointments canceled less than 24 hours before your scheduled appointment will incur a $50 late fee. To cancel or reschedule, please call 123-123-1234.

Why you should have a cancellation policy

Decreases missed appointments. Cancellation policies reduce the number of no-shows and missed appointments. When clients miss your appointments, it dramatically reduces your revenues. The psychological effects of a cancellation policy significantly increase the likelihood that your clients will show up to their appointment.

Establishes clear communication and boundaries. Clients inevitably need to reschedule from time to time. A cancellation policy clarifies how many hours notice you expect your clients to give when they need to reschedule. By clarifying your expectations upfront, you prevent any confusion. Your policy should also clearly communicate the fee for a late cancellation. When expectations are not clearly communicated, it can easily lead to frustration for you and your client and, in the worst cases, will lead some clients to leave your business altogether.

Gives you time to refill appointment cancellations. If your clients give you enough notice, you can then fill your vacant appointment in that time frame and avoid any loss of revenue. Depending on your business, you may need days or just hours to fill these appointments. Many companies require at least 24 hours notice.  However, you can also use software, like Reminderly's Waitlist Manager, to automatically fill even last-minute cancellations in minutes.

Required components of a cancellation policy

Financial penalty. Clearly define how much you will charge your customers for each no-show. If applicable, you may also want to communicate that insurance will not cover these missed appointments.

Cancellation deadline. Specify how long before their appointment time your clients must cancel their appointments by (e.g., 24 hours, two business days).  

Process for canceling. Let your clients know how they can cancel their appointment. Do they need to call, or can they send you a text? Some businesses intentionally make it difficult for clients to cancel, so they will require them to call and speak to a staff member. Others prefer to make it as convenient as possible by accepting a text message response. Both have pros and cons; it depends on your specific business needs.

Optional components of a cancellation policy

Escalating penalties. You may want to be more lenient for the first missed appointment and then increase the penalty for repeat offenders. For example, you can increase the fee for each missed appointment (e.g., the first no-show has a fine of $25, and all subsequent no-shows have a cost of $50). This policy can be formally defined, or you can informally enforce it. For example, your policy may say all no-shows cost $50, but you choose not to charge your clients for their first two missed appointments. With that said, you need to be careful about being consistent so as not to cause confusion over time. And remember: some of your clients likely talk to each other!

Define missed appointments. If your client is 15 minutes late, does that constitute a no-show? How about 30 minutes? Clarifying this expectation in the cancelation policy ensures that clients know what you expect of them and when they can expect to incur a late fee.

Require signed acknowledgment. You may want to require that your clients sign your cancellation policy. You can have your clients sign in person or with e-signing software.  

Clearly communicate your policy

Keeping your cancellation policy concise will make it more likely that your customers will understand and remember it. A straightforward policy is perceived as more fair – people generally don't appreciate lots of "fine print." It is best to communicate your policy when your clients book their appointment and reiterate it in their appointment reminders.  

Cancellation method

Cancel by phone call only. Some businesses require that clients cancel by phone. This has the benefits of (1) ensuring that you know of the cancellation, (2) discouraging cancellations because it requires more effort to call, and (3) allowing the staff member to reschedule the appointment immediately. Some businesses allow people to leave a voicemail to cancel, while others require speaking directly with staff.

Allow text or email cancellations. By allowing clients to cancel via text or email, you decrease the burden on them. This increases the chances that they cancel instead of simply no-showing. For example, suppose a client gets a text appointment reminder while in a meeting. In that case, they can quickly respond via text that they need to cancel. On the other hand, if they need to call, they may forget to call once their meeting is over.

FAQ

Should I have an appointment cancellation policy?

Yes. All businesses should have a cancellation policy. Creating a policy like our cancellation policy example makes it clear what your expectations are of your clients, and it prevents future miscommunication and disagreements.

What is a reasonable cancellation period?

This may vary based on your business. One major factor to consider is how long it takes to fill a canceled appointment. Most companies ask for 1-2 business days' notice, which usually gives them enough time to contact people on their waitlist. Clients appreciate a shorter cancellation period. One way to decrease the time you need to fill an appointment is to use Reminderly's Waitlist Manager, which automatically notifies everyone on your waitlist of the opening, confirms with the first to respond, and then sends a follow-up to everyone else that the appointment has been filled.

How should my customers be allowed to cancel?

This depends on your specific business. Though the more options you give your clients (e.g., calls, text messages, and emails), the more likely they are to provide you with adequate notice of their cancellation. Whichever you choose, you want to be clear about your expectations in your no-show policy.

How much should I charge for a cancellation fee?

Typical cancellation fees vary from industry to industry and business to business. But a general rule of thumb is between 50% and 100% of the appointment fee. To collect these fees, you may need to keep a credit card on file. You want to balance charging enough to discourage your clients from missing their appointments against charging so much that they get angry when they occasionally need to cancel at the last minute.

Should I be lenient in my enforcement of the policy?

Being lenient can be helpful if it's done consistently. For example, waiving the fee the first time anyone misses an appointment can gain you significant goodwill with your clients. However, if you are inconsistent about when you waive the fee and when you don't, it can create confusion and ill will.

Are cancellation policies fair?

When they are clear and adequately defined - absolutely! Although clients never want to pay for services that they don't use, you also shouldn't have to lose out on revenue because your client forgot to tell you in advance. Being clear and concise gets everyone on the same page early and is the fairest solution for everyone. Be sure to communicate your policy upfront. Especially for new clients, you may want to tell them about your policy when they make a new appointment.