I don't think the following can be accomplished.

Customers pre-pay several months in advance for services. These payments are taken into AR as a cash receipt leaving a credit balance. Monthly we create new/monthly invoices for these services. If a payment is made by Credit Card, then we apply the CC payment during invoice prep.

Is there a way we can apply the AR credit that is on file? I believe the answer is no, because it is not a new cash receipt. Currently we apply the credit balance to the posted invoice in AR after posting the invoices. It would be nice to be able to send a "Paid" invoice to the customer.