Starting a Practice

The Best Cancellation Policy for Your Therapy Practice

Headshot of Bryce Warnes
March 10, 2024
October 5, 2023
Bryce Warnes
Content Writer

Creating policies for your therapy practice can feel like an overwhelming task, and many therapists with new private practices find drafting a cancellation policy particularly difficult.

On the one hand, lack of a clear, definitive cancellation policy could lead to lost earnings and havoc with your schedule. On the other hand, clients sometimes have valid reasons for cancelling appointments at the last minute, and enforcing a cancellation policy may feel harsh.

But you can strike a balance between looking after your business’s needs and looking after your clients’ needs; it just takes a little planning. Here’s how to create the best cancellation policy for your private practice.

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Why do you need to create a cancellation policy?

When you’re just starting out as a self-employed therapist, you may be tempted to go ahead and start taking on clients without having them agree to a cancellation policy. But that can lead to problems.

A major dent in your income

It doesn’t take many clients cancelling appointments to create a serious strain on your financial situation.

For instance, suppose you charge $100 per session, and on average you get one last-minute cancellation per week. By the end of the year, your revenue will be about $5,000 short of what you would have earned otherwise.

But it’s about more than a shrunken paycheck. When revenue is hard to predict—fluctuating week-by-week and month-by-month because of cancelled sessions—it’s difficult to make financial projections. You’ll have a harder time creating and sticking to budgets, setting goals for the future, and eventually scaling up your practice.

Eliminating or reducing the toll last-minute cancellations take on your income isn’t about greed, it’s about ensuring your practice stays afloat financially.

An unsustainable schedule

You deserve a predictable schedule with clearly delineated business and personal time. Last-minute cancellations directly hinder that.

For instance, when a client cancels their session the day before you’re due to meet, you may find yourself with a free hour in the middle of a day otherwise packed with sessions. Sure, you could spend the time catching up on notes. But maybe if you’d known of the cancellation further in advance, you could have shifted around your appointments and ended the day early—enjoying some much-needed personal or family time.

On top of that, it’s likely you reviewed your notes and prepared yourself mentally and emotionally to work with that particular client. When they cancel at the last minute, your preparation goes to waste.

When you have a cancellation policy in place, clients are less likely to ditch appointments at the last minute—so your schedule is more predictable and easier to manage.

Poorer outcomes for your clients

When it’s easy to ditch therapy appointments at the last minute, some clients may find it more difficult to commit to a course of therapy and to working steadily toward their mental health goals. 

Lack of a cancellation policy could make it easier for clients to avoid sometimes-difficult therapy sessions. The result is stagnating progress and an overall lack of commitment on their part.

What to include in your cancellation policy

When you draft a cancellation policy for your therapy practice, these are the elements you should include.

A signature

Last things first: Your policy takes the form of an agreement, which your client signs. Not only does this give you a supporting document in any disputes about payments or cancellation fees, it can help your client mentally and emotionally commit to following the policy.

Key information about you and your client

Be sure to include your client’s full name, as well as your name and credentials and your practice’s name.

Statement of purpose

It’s a good idea to provide a brief outline as to why the policy exists and how it serves both you and your client. 

You can use this part to help explain to your client the purpose of the cancellation policy, and to help them understand how last-minute cancellations negatively impact you both.

Timeframe

Or: How last-minute is a last-minute cancellation? Most therapists go with a 24-hour, 48-hour, or 72-hour time frame. 

If your time frame is 48 hours, for instance, your client has up to 48 hours before your appointment or the day of your appointment to notify you of a cancellation. So, if they cancel the night before their session, they’ll incur a fee; if they cancel three days beforehand, they won’t.

The timeframe you settle on will depend on your own particular schedule, and how much notice you feel you need to keep it running smoothly. 

The fee

If your client cancels at the last minute, can they expect to pay the full cost of the missed session? Half the cost? Or a flat rate that applies regardless of the cost of the session?

While your clients may come from different economic backgrounds and you may offer sliding scale fees, be consistent with your cancellation fee. If the fee is the full price of the missed session, that applies no matter who the client is. 

Waivers (aka “freebies”)

Some therapists allow their clients one free last-minute cancellation after they begin working together. If the client cancels at the last minute, they more or less get off with a warning that, next time, they’ll have to pay a fee. 

Other therapists don’t offer any waivers or freebies. It’s up to your personal preference and what you feel comfortable with.

Exceptions

In some cases, events totally beyond a client’s control may lead to them cancelling a session or failing to show up. Examples include sudden illness or injury, or home or family emergencies.

Whatever exceptions you make to your policy, try to be as clear as possible in the policy document itself which exceptions you’ll accept. Judging clients’ reasons for cancellations on a per-case basis can lead to unclear boundaries and difficult decisions.

Alternatives

If your sessions are typically in-person, will you allow a client to attend a remote therapy session in case of certain last minute cancellations (eg. because of bad weather or childcare issues)? If they’re unwilling to attend a remote session, will you charge them the cancellation fee?

Cancellation limits

For some clients who are unwilling or unable to stick to regularly scheduled therapy, cancellation fees may not be enough of a disincentive to continually cancel sessions at the last minute.

How many sessions may a client cancel last-minute before you end your therapeutic relationship with them and refer them to someone else? It could be:

  • X cancellations in a month
  • X cancellations total
  • X cancellations in a row

Be clear about this, and specify what sort of notice or warning clients can expect from you before you start discussing their moving to another practice.

Rescheduling

If a client cancels last-minute, will you offer to reschedule their appointment to the next available open spot? Will you put them on a waitlist in case another client cancels? Or will they need to wait until your next scheduled session to see you?

How they’ll be charged

Explain clearly how you’ll collect late fees—whether as extra cash or credit payments collected at a later session, or charges made directly to the client’s card on file. You should also specify that any invoice you send them for the session will include a line item noting the payment is for the cancellation, not a full session.

Notification of changes

Specify how and when you’ll contact your client in the event your cancellation policy changes, and reassure them that you’ll explain it and get their consent before the new policy goes into place.

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How to share your cancellation policy with clients

Have all new clients read and agree to your cancellation policy before you start working with them. This is the best way to make sure everyone is on the same page from Day One, and that there will be no surprises, confusion, or hurt feelings when it comes to cancellations.

Make a copy of your cancellation policy available to your client, ideally in a digital format that can’t be lost or damaged, and keep a signed copy for your files.

Double up your policy

Give your client two opportunities to read and agree to your policy:

  1. As part of your informed consent document, which they sign when you begin working with them
  2. Separately, as its own document, reviewed and signed at the time they receive the informed consent document

A new client may skim through the informed consent document and fail to absorb the details of your cancellation policy. They may also skim the policy itself. But if you follow this method, you at least give them two opportunities to become aware of the policy and take the time to read it.

Best practices for enforcing your cancellation policy

Cancellations can be emotional. Your client may be dealing with stressors in their life—pressure from work or family, personal struggles when it comes to attention and time management—that push them to cancel at the last minute.

At the same time, you may experience your own emotional impact when a client cancels last-minute—frustration, weariness, or blows to your self-esteem.

But, at the end of the day, your cancellation policy is a professional matter, a tool for helping your practice stay solvent and manageable. Here are some best practices for making it easier to enforce.

Discuss it the first time it happens

Whether you waive the fee for a client’s first cancellation or collect it, take some time at the beginning of your next session to briefly review your policy with them and reiterate that they will be charged in the future if they cancel again.

Keep a credit card on file

It’s easier—interpersonally and logistically—to simply charge your client’s credit card when they incur a late fee than to try to collect a debit card or cash payment. If your client misses a session, send them a reminder about your policy and a notification that their card will be charged.

Explain your reasons while remaining professional

Whenever you discuss your cancellation policy, be clear with your client that cancellation fees are not a form of punishment. By collecting fees, you’re helping to ensure you can stay in business and continue serving every client on your list. And your policy helps to keep them accountable to their therapy goals, ensuring the outcome is positive.

A clear, concise cancellation policy is just one piece of paperwork you need to keep your practice running smoothly. For a full list, check out the complete list of policies and paperwork for your therapy practice.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

Bryce Warnes is a West Coast writer specializing in small business finances.

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