I've only experienced this once, and thankfully I found out they didn't have the funds before I started the work. I won't name the person, but they wanted something like the strip of 4 pictures that you get from a photobooth, 2 characters in each shot. This would have made it a pretty big commission so they asked to pay in installments. I agreed, and said I would start sketching after receiving the first payment. We agreed on a deadline for her to send it.
The date she was supposed to send the money came and went with no payment, and no explanation either. I waited for two weeks before sending a note flatly stating that I was cancelling the commission as I had other people wanting to get art from me. This perhaps seems hasty (hence why I am asking for your opinions on this type of issue) but the way I see it is if I have such a hard time getting partial payment before beginning the work, the chances of receiving the rest of it would be even less. Had she noted me at the time saying that she would be sending the money a little later than expected that would have been fine, but the lack of communication on her end made me decide that I didn't want to get any deeper into this.
What I sent to her was
"Since it's been 2 weeks since we agreed upon your commission and I've heard nothing further nor received any partial payment I'm canceling your commission slot. Nothing personal I just figure you are no longer interested and I have other people who would like a piece from me so I am moving along."
"not that i'm not interested..i just had a lot of bills come up that im struggling to pay currently."
My first thought really was 'if you are struggling to pay bills then why try to commission art you know you can't afford?" along with feeling semi-guilt-tripped so I didn't really know how to respond to that. Handling the whole thing was difficult for me as it was my first time experiencing this situation. It was frustrating and disappointing.
Note that I don't really think that this person had any intention to scam me, more like she simply went a little beyond her means I guess which makes it a little trickier to deal with. It's easy to not feel mean when dealing with people who have shady intentions.