I think this could be a simple situation made sticky if your not careful. Couple of things you need to think about:
You already went above and beyond the call of duty by creating the cake with out receiving final payment. You took a very BIG risk and luckily you finally got paid. With this being said I work full time and am the manager of our AR and AP department so I see both sides of the coin daily. I constantly have to go after people for payment as well as have to do what needs to be done when an invoice of our isn't paid on time and we are put on hold. Point is - she didn't pay you on time. She didn't pay by the terms and could easily be charged with a finance charge or not have gotten her cake.
Whether or not the payment was received late has NOTHING to do with why the cake collapsed.
Many factors could have played with the cake falling a tier. You said it was fine when you left it, who touched it after you left, bumped the table? You never know so don't automatically assume it was by your fault. Don't automatically assume you need to give her money back.
Yes as someone pointed out how would you feel if you spent that much money on a product and it didn't perform, BUT when it comes to food there are so many factors that could have led to the situation that were out of your control - weather, placement at the venue, was it near a sound system? The vibrations from DJ's and such can cause a cake to collapse - not your fault.
If the cake was structurally sound it should not collapse that easily. For a decorator to take the stance that oh it was fine when I left it not my problem is definitely not the way to go. If we make a cake and it collapses, we should be responsible enough to address the issue and realize hey this could be due to a mistake I made. It's like building a bridge, you can't just walk away after construction and say ok it's standing and I have pictures to prove it was standing. It needs to be able to withstand the traffic and different scenarios. If the bridge collapses would you say, "Oh the guy driving the car had his bass up to high causing the bridge to collapse. I have pictures to show it was standing when I built it so it's not my fault"? The same should stand for a cake. People won't remember how amazing the cake was but you can be sure they will remember it collapsed.
Cake collapse + Bad customer service = Little to no business eventually.
If your customer was thrilled with the cake don't make too much of an issue out of something that isn't. Instead of giving her cash (keep in mind she already held your money she owed you for the cake that could have been collecting interest) maybe offer her a coupon for a certain amount off of her next order. Or a gift certificate for a certain amount.
Just some food for thought.
The original poster is handling the situation in just the way a situation like this should be handled. She's acknowledging that the cake was not structurally sound instead of dismissing her client.
Okay y'all
Thanks so much for all of your input. If anything thsi experience will halp me be a better decorator & pay wayyyyyyyyyyyyyyyyyyyy more attention to how I support even the simpilest thing.
I also learned never to accept such a late payment if it means rushing to get finished.
So you want to see the pictures here is one.
This was my final reply from the customer. I decided to refund her half of the cost of the cake, also the tasting fee.
I also offered her a free 8" cake ($50 doller value)
this was her response...
Thank you for your response. In my experience in working with you, I realize that you have high standards for your business. I would definitely recommend you to anyone. This incident does not change that; what happened with my cake was just unfortunate. Your offer is fair, thank you very much.
I really thank God this lady is truly so kind. She made it better for me although I still feel so bad, that hopefully will go away with time.
cohenandlillysmom
I love the idea of a gift basket too 
Take care everyone
night night
sounds like everyone is satisfied then. Fortunately your customer was really understanding. I think that will make it a lot easier for you to give the money back, and it sounds like she will be a repeat customer!
Hi there,
I didn't read through all the posts, but I think $40 is way too little. That is less than 10%. The late payment also has nothing to do with the cake collapsing.
What you need to do is figure out how much the bottom tier cost, and then refund that.
Good luck!
I only do this as a hobby my question is how do you keep it from collapsing? To look at the picture those cakes on top look really heavy I've done tiered cakes before I dowed them and placed cardboard between tiers what else can be done if you dont have the stacking system?
Molly
Oooo...I'm sorry hun. My first TT collapsed very much the same way. My dowels totally slipped. I was looking at the pic of the cake before collapse and then the after pic, and I'm guessing the white dice is behind the two black ones you can see in your gallery. Is so then the structural issues I can see in the gallery pic would be consistent with where this one collapsed. I'm so happy it worked out with you still having a happy customer. I think you're doing the right thing. You've showed great professionalism and learned some good lessons. I get increasingly more concerned about it happening again to me and think I'm gonna check into a better system myself.
I guarantee my cakes through delivery, and I cannot be liable for anyone knocking the cake over, etc... If this happened to me, I would ask for a detailed description & if they had any pictures so I could assess the situation. If it seemed to be my fault, I would either refund 25%, 50%, or offer a free birthday cake, or 50% off a cake in the future, depending on what happened. The bottom tier being completely crushed/non-usable - I would refund them 50%. If the upper tiers just caused the bottom to sink an inch, I would offer them a 25-50% discount for a future order.
I'm wondering if you actually used dowells, or do you need to evaluate whether you should use them? If you did not use them, I think that would cause you to give more of a refund or future discount; and if you did use them - how many/how where they placed/what did you actually use as dowells. This is very perplexing!
I'm SO sorry this happened to you! I haven't had one crushed, however I did have an un-boxed, 3D Lightint McQueen (CARS) cake slam into the back seat of my Suburban, taking off all the decorations on the back! I couldn't believe it, but I got cut-off on the freeway really bad! I offered the customer 50% off, but he was so hapy with the cake that he insisted on paying full price + tip. (it was an awesome cake, I think it's pictured here).... But my point is that it sounds like you also have an awesome/understanding customer - and you want to KEEP THOSE KIND! =) So just give the best of what you feel you should do, and she'll most likely be happy & order from you again!
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