You can cancel a booking from within the booking record itself. Open the booking from the Calendar, Dashboard or Booking search screen. Cancelling the booking will trigger a cancellation email to be sent out to the guest and will open up the room for resale.
If the booking is cancelled within the penalty period, 2 things happen:
An alert is posted on the Recent Activity panel telling you that a Cancellation penalty can be applied for this booking, and what that penalty is (remember that different rateplans can have different policies in Caterbook):
A "Cancellation penalty"entry appears under the booking's financial summary on the Rooms tab.
You would then add the in-built Cancellation penalty extra, with the apprioriate value and charge the guest for the relevant amount.