In order to be in business, there has to be systems and procedures put in place to lessen the risks of giving credit.
1. Contracts - Any contract should be legally enforcable and fair in the country to which you do business.
2. Terms & Conditions - Again these must be reasonable and legally enforcable.
3. If a prospect is already trying to lower prices before you start work, this would start alarm bells ringing, I would then obtain a credit check, as the prospect may well need the job doing, but not really have the money to pay!
4. On all Invoices there should be a line or two explaining that you are aware of the late payment regulations, and that you will not hesitate to use the regs regarding interest on late payments.
5. After work has been completed, you should have the client sign that the job has been completed to thier satifaction.
In this particular case, I would send a firm, but polite letter requesting payment in full within the next 7 days, failure will result in you starting legal proceedings without further notice.
Bouncing a cheque is illegal in the eyes of the law, however I would say that it is unlikely that you will see any cash from this person, as by the time cheques start to bounce the business is already is very serious trouble.
In this current economic climate it is vital to have all the systems and procedures in place to act as a brake, at the moment it is easy to win business, but do a little digging and all becomes clear.
Regards,
Rob