Invoice can be cancelled manually or when a booking is cancelled.
On the left menu bar > payments > invoices. Select the invoice you would like to cancel. Under action, click on "Cancel Invoice".
Note: Cancelling the Invoice will not refund any charges. Learn how do I refund a full or partial amount to a customer?

There is also an option to send the canceled invoice to your customer.

Once the invoice is canceled, the invoice status changes to "Cancelled".

Related articles -
How to generate & send an invoice?
How to add company terms & conditions?
Batch Invoicing: Batch multiple bookings from one customer into a single Invoice
FAQs -
How do I know if an invoice is paid?
How do I update the Billing Address on the Invoice?
Can I send an invoice to multiple people at the same time?