Customer in credit by £170. This month he has paid his invoice minus £170. In Receive Payment, credit displayed as unapplied payment. How do i apply it to this invoice?

I'll help you apply the credit, LisaC1.

When there's an overpayment from the previous invoice, QuickBooks Online automatically sets the amount as credits.

To apply the amount on the next invoice, you can follow these steps:

1. On the left panel click Sales, and choose Customers.
2. Click the customer's name and select the Receive Payment link of the invoice you want to pay.
3. On the Receive Payment page, put a check mark on the invoice and the Unapplied Payment box.
4. Click Save and Close.

I've added a sample screenshot for reference.

When you go back to the customer information section, the balance will now show as zero.

Moving forward, you can turn on the Automatically apply credits to the settings. This option automatically applies credits to the next invoice you create for the same customer. 

1. Click the Gear icon located in the upper right-hand corner.
2. Under Your Company, click Account and Settings.
3. On the left panel, click Advanced.
4. Scroll down to Automation and click it to expand.
5. Put a check mark on the Automatically apply credits box.
6. Click Save and then Done.

Please let us know if you have any additional questions related to customer transactions. Thanks.