Credit Memos that Tie to an Invoice

[ja...@productive1.com]

We are working with returns and we recently noticed that the system
creates a Payment to the customer.  Is there a way to create a credit
memo instead of a payment?  or decide on the return if a credit vs
payment is created?  Also is there a way to relate a credit memo to the
original invoice that is getting credited out?

Thanks,

James