What feature allows a credit memo to be applied automatically to customer invoices?

The correct answer relates to the automation features offered by QuickBooks Online. The platform is designed to simplify frequent accounting tasks, including the management of credit memos and their application to customer invoices. By following the default setting of QuickBooks Online, users can streamline the process, allowing credit memos to automatically apply to outstanding invoices without requiring additional manual input. This automation saves time and reduces the potential for errors, enhancing the overall efficiency in managing customer accounts.

Options that involve manual adjustments or client discretion indicate processes that may require more effort and oversight, which are contrary to the intent of utilizing automated systems for efficiency. Furthermore, an approval system for credit memos would imply additional administrative steps that are not inherent to the default automation feature, further emphasizing the benefits of the chosen option.