It's totally human to behave the way that ex employee behaved. Rarely will anyone say no to having more cash. Its just this guy's character and preferred way of getting things done that is disgusting. He should not be faulted for wanting more cash or being a stingy and frugal person. Its his greed of wanting more at the unscrupulous expense of others that is the biggest problem.
I had a similar problem. I sold a car to this guy for $32k some years back. He asked for installment (and I'm silly enough to say ok, like the company you mentioned) and after paying till $31k, he refused to pay the remaining $1k and disappeared. I have the option of taking up legal action which will most likely cost more than $1k, therefore I just let him 'escape'. Its really irritating. This is the loop hole in our system for such small sum of money. Small claim tribunal also cannot help me much then.
The key now is how fast we want to put this behind and move on with life. If speedy resolution is preferred, then this boss should just take the 10 installments. There are simply so much more to do with life than to be caught up with this minor issue. However, as I've mentioned, if the priority is to teach this guy a lesson for his insolence of wanting to benefit at the expense of others, then do it quick.