Does anyone know if there is anything native that automatically converts Customer Deposits on Sales Orders into Payments when the Sales Order is Invoiced? Normally a Deposit Application is created and applied and the Customer Deposit remains, I thought.

If deposit was created from a Sales Order "Create Deposit" button it should automatically apply.

Yes, that's correct thanks Michoel. It looked like we had a situation where a Customer Deposit record was instead being replaced by a Payment record. I can't see anywhere this may be happening for this account so I'm going to chalk it down to our user maybe being mistaken until we see it again.