Understanding Deposits: What You Can (and Can’t) Keep When a Customer Cancels

Who said running a business is easy? As a small business owner, you wear many hats — creator, customer service rep, marketer, admin… and let’s be honest, the business side isn’t always the fun part.


One question that regularly pops up in Facebook groups and conversations with fellow business owners is:

“Am I allowed to keep a customer’s deposit if they cancel their order or booking?”

It’s a really important topic, especially for those of us who take pre-orders or bookings for balloon décor, event styling, or equipment hire. So let’s take a clear and practical look at how deposits work — what’s fair, what’s legal, and how to protect your business and your customers.


What is a Deposit?

A deposit is a payment made by a customer to secure goods or services for a specific date. It’s usually a portion of the total cost, paid in advance, and acts as a commitment to go ahead with the order or booking.

Once your customer pays a deposit, they’ve entered into a contract with you — whether that’s verbal or (ideally!) in writing. That contract comes with legal rights and responsibilities for both parties.





What Should Your Contract Include?

Here’s what to clearly outline in your Terms and Conditions or booking form:

  • Deposit amount – either a flat rate or a percentage of the total price

  • When the deposit (and final balance) is due

  • Payment schedule – if you offer instalments

  • Full details of the product/service – including colour, size, materials, delivery/setup specifics

  • Date of delivery or event

  • Cancellation and refund policy – including if the deposit is refundable, partially refundable, or non-refundable

  • Any cancellation charges or fees

Your customer should be given a written copy of these terms (via email or hard copy) and a receipt confirming payment of the deposit.


Terms & Conditions / Booking Form Checklist (sample form)

Customer & Booking Details

Client Name: _______________________________________

Event Date:  ______________________

Booking Reference/Job No.: ______________________

Deposit Details

☐ Fixed £__________    ☐ Percentage _______% of £__________ (total cost)

Date Deposit Due: __________________    Balance Due By: __________________

☐ Instalments    ☐ Full balance upfront

Payment Details: _____________________________________________________

Product/Service Details

Description: _________________________________________________________

___________________________________________________________________

Colours/Materials/Setup: _______________________________________________

Delivery/Setup Time: __________________________________________________

Cancellation & Refund Policy

☐ Refundable    ☐ Partially Refundable    ☐ Non-Refundable

If non-refundable, reason: ____________________________________________

Cancellation Fees: __________________________________________________

Confirmation

☐ Client has received Terms and Conditions (email/hard copy)

☐ Client has received a deposit receipt

☐ Client agrees to the terms above


Client Signature: _______________________  Date: __________

Business Rep: _________________________  Date: __________


Is a Deposit Always Non-Refundable?

Not necessarily — and this is where many small business owners can get caught out.

Simply labelling a deposit as “non-refundable” isn’t enough. For it to truly be non-refundable, it must meet certain legal criteria. The Competition and Markets Authority (CMA) in the UK requires that terms must be fair, clear, and proportionate.

A business can retain a deposit only if:

  • The customer was made fully aware of the non-refundable policy before paying

  • The deposit amount is reasonable and reflects actual costs incurred or potential loss to the business

  • The cancellation happens in a way that genuinely causes your business a loss (e.g., too short notice to rebook the date)

Unfair terms — such as “all deposits are non-refundable in all circumstances” — can be challenged and may not be enforceable.


Real-World Example for Balloon Artists

Let’s say you quote £500 for an event, with a £150 non-refundable deposit due at the time of booking. Your Terms and Conditions clearly outline what the deposit covers: planning, admin time, pre-ordering stock, and reserving your time.

The client signs the T&Cs and pays the deposit. Then, two days before the event, they cancel.

You may be able to keep the deposit if:

  • Your Terms and Conditions were shared and agreed upon in advance

  • The deposit amount fairly reflects the costs/losses incurred

  • You can no longer rebook the date or reuse materials

What you can’t do is treat the deposit as a penalty or use it to claim excessive costs you didn’t actually incur.


Top Tips for UK-Based Small Businesses

  1. Always provide written Terms and Conditions
    Use clear, simple language and make sure clients tick a box or sign to say they’ve read and agreed.

  2. Be transparent at the time of booking
    Talk customers through the key points. Don’t bury important info in fine print.

  3. Make your deposit policy proportional
    Don’t charge a £200 deposit on a £300 job unless you can justify it with actual upfront costs or loss of business if cancelled.

  4. Put everything in writing
    Emails count — but a proper booking form or contract is better.

  5. Avoid blanket “non-refundable” wording
    Instead, explain why the deposit is non-refundable (e.g., time, resources, stock ordered).

  6. Consult a professional
    If you’re unsure, speak to a legal advisor or trade body (like BAPIA) to check your contract wording is up to date and compliant.

  7. Keep records
    Always document correspondence, signed T&Cs, and any costs incurred so you have a clear record in case of disputes.


In Summary

Taking deposits is a smart and standard practice for balloon professionals and party businesses. But to protect yourself — and avoid falling foul of UK consumer law — you must be clear, fair, and consistent in how you handle them.

If in doubt, get advice. Your terms should be specific to your business, your services, and your market. You’ve worked hard to build your business — it’s okay to protect it, so long as you do it fairly.


Happy Ballooning!
Sue|

Follow me @suebowler

To find out more about BAPIA visit www.BAPIAonline.com



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