The number one rule: Have a contract.
You can find a fairly good example of a contract here: http://stuffandnonsense.co.uk/content/dl/2010/05/11/contract...
This is how I work, it's working well though I am still fairly new at this as well.
After talking with the client I'll put together a proposal which details the full scope of the project and the estimated cost. When the client agrees with the proposal I'll send a contract which details my payment schedule which is generally in 3 stages:
1) 10% of my estimate is due on contract signing
2) 40% of my estimate is due before work can begin on the project
3) The remaining 50% is due on completion.
Once the contract is signed I send over an invoice for the 10% deposit payment.
The 50% up-front payment weeds out any clients that were never going to pay, and I don't hand over any assets until the final fee has been paid.
