Applying a Credit Note when receiving a payment

Hello,

I am in need of some help with receiving the following payment below is the remittance advice we received. 

The credit note 8958 of -97.41 is unable to be applied when receiving payment it will not show up I can only apply amounts above apart from the credit note. Is this because I need to apply this to a sale or does this mean the amount has reduced the overall amount paid i am very confused and how do i record it??