Payment or File first?

I'm fairly new and want to know how other content creators are doing their business. I recently did a job where I made an entire addon and had it finished, and the guy I was doing the job for insisted on getting the file first and that he is trust worthy because he "has a good rep". Last job I did, payment came first and I gave him the addon second. Anyways I see too much risk and not enough guarantee in handing over the file first so our deal eventually got cancelled. I want to know if I handled this correctly and how others do their business.

Note: Both the buyer and I tested the addon on my dedicated server so there was proof that it was working prior to our payment dispute.