@Tim-and-Holly0
I would be very wary of doing it this way. You never know if the guest is going to apply directly to Airbnb for a refund and be granted one contrary to your cancellation policy. It does happen. Then you are out of pocket as you end up refunding twice.
So, you could tell the guest that the host doesn't get paid until after the check in date and Airbnb holds the funds in the meantime (true) so you can only refund them once it has reached your account.
Or, what's probably quicker is to call Airbnb and request they do a penalty free cancellation for the guest (make sure they do not count it as a host cancellation and penalise you - explain that it is the GUEST that wants to cancel and you are happy to waive your cancellation policy on this occasion). I have had to do this a few times when I was using instant book.
Before doing any of that though, check to see if the guest is still within the 48 hour 'grace period' in which they can cancel penalty free. If so, tell them to cancel from their end.