Balance VS Net Balance on Accounts

Need to discuss how to proceed with accounts that have payments & credits that are Unapplied to open invoices. Example in Screen shot shows account 10296 is past due and owes open invoices of 1978.22, they have a payment of 1905.84 that hasn't been applied to the open invoices and a Credit of 64.76 that also needs to be applied to an open invoice. The actual balance owed is the Net balance of 7.62