Each order has a payment status. When an order is submitted or updated, the payment status is set to None.
You can change the payment status to Sent on your Orders Placed page in the Paid column. The background of the paid column on the orders placed page is in red if payment was not yet sent or green if payment was sent. The option to change payment status will be disabled if the seller changes the payment status. You should always wait for an Invoice from the seller before sending payment.
You can change the status of each order to paid by default when an order has been paid for. You can also separate the payment status from the order status which will give you more status options for the payment. To do this, select the "Separate order payment status from order status" option in your Orders Settings page. Each order will then have its own payment status drop-down selection box separate from the order status. After this option is selected, you will be able to change the status of your existing orders from paid but the option to change the order status to paid will not be available.
Order Payment Status Defined:
= Allows adding to an existing order if there is one or more order submitted to that store in that status from the same buyer.