we have refunded a credit note directly from the bank

Hello there, Paul161157.

It's possible that the payment of the invoice was created prior to the credit note. If so, we'll need to delete the payment and recreate it. It's how we can eliminate the unapplied status of credit note and properly link it to the payment. Let me guide you how:

1. Go to Sales on the left panel.
2. Within the Customers tab, enter the name of the customer in the search field.
   
   
3. Open the payment by clicking it. 
   
   
4. Make sure the invoice payment is ticked on the Receive Payment page.
5. Click More and select Delete. Then, Yes to confirm.
   

Once done, go back to the transaction list of your customer. Click the Receive payment option under the Action column. Let's ensure the payment and credit note is linked by putting a check to each of them. Then, save it again. Below is the sample screenshot for additional reference:

 You can double-check the status of the credit note. It should show as Closed in the Status column. Then, you can check this article for additional details in applying the credit note: Create and apply a credit note.

Also, you can pull up the Transaction List by Customer report, and customise it to show the credit note only and memorise what you have customised.

Let me know if you have other questions by commenting below. I'll be around to help you anytime. Take care always.