Thanks both for your continued help. I'm there I think!
Just to confirm my understanding is correct...
1. Payments received prior to invoice #1004 should be credited to the client trust account and then debited in invoice #1004.
2. Moving forward, there will be no retainer as the client is in debt.
3. Payments received after invoice #1004 should be marked as payments against the invoice.
At the end of the month, I will:
4. Raise a new invoice for the new charges, e.g. #1005
5. Send a statement to the client detailing the outstanding balance for invoice #1004.