Hi @Jane14,
Yes, @Jeet0 is correct. Airbnb does charge the guest the entire amount at the time of booking but they do not pay you until 24 hours after the guest checks in. So, Airbnb does have your money in which they hld for you and if the guest cancels, they apply whatever cancellation fee you have setup at the time this guest booked.
I would like to add one suggestion for you @Jane14. If you are concerned about cancellation at the last minute, you should definately change your cancellation policy from "flexible" to something that has more teeth like "moderate" or "strict".
Dave
David
Superhost Ambassador ~ Host Club Community Leader ~ Community Expert ~ Experienced Co-Host