Hello there, syoder7802.
Once you've overpaid a vendor, it will create an unapplied payment (vendor credit). To offset the incorrect payment, you'll have to deposit the refund, then link it to the unapplied payment.
First, here's how you can record the deposit:
Then, here's how you can link the credit to the deposit:
Once done, the vendor's balance will be zeroed out.
I'm just a post away if there's anything that I can help you with. Take care always!