@AKS27 

Be careful creating credit memos to clear unpaid invoices on cash basis.  Just creating a credit memo without knowing what product/service(s) to use can cause incorrect entries.  If you use a credit memo, make sure to use a product/service linked to the same income account(s) as the invoice.  If you don't, when you apply the credit memo to the invoice, your income will increase on cash basis which is incorrect.  Another option is to reduce the outstanding invoice amount to match the amount paid.