Apply a previously recorded payment to a newly created (or existing) invoice by clicking on the payment from the client's Billing history box.
In the Billing history, payments that are attached to an invoice—or, Applied Payments—will say which invoice they are attached to. Un-applied payments—not attached to an invoice—show up as "applied to account balance".
After clicking on the un-applied payment, a pop up will appear where you can select the drop down menu beside Applied to to change the designation for the payment.
Once you update the payment you'll see the wording has changes to say which invoice this payment is applied to. If you haven't done so already, go to the invoice itself and click onto Actions > Mark Paid to close out the invoice. Both the invoice and payment will then appear as PAID in the billing history box.