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"I see no way to create a refund check or credit memo the...

"I see no way to create a refund check or credit memo there"

When you already have the overpayment, you don't ALSO want a Credit Memo. That would be a duplicate entry for the same value. The overpayment already is an AR credit.

The refund check needs to post as AR for "the reason" of this expenditure, for that customer name. That makes it available as if it is an invoice, to apply the credit against.