Hello, donerightwaybookkeeping.

I'll share some helpful details with you on why QuickBooks Online doesn't create a credit memo when recording an overpayment. 

QuickBooks Online doesn't actually create a credit memo when recording an overpayment.

Rather than recording two transactions (credit memo and the payment transaction), the system will just record a single Payment transaction with a negative balance (indicating the overpayment). This is to avoid redundancy and keep your customer's transactions list tidy. 

Here's a sample screenshot: 

When you create the next invoice, the overpayment will be automatically applied to it. 

There are ways to handle the overpayment. If you'd like to record it as a tip or a refund, you can check this article for the steps: Handle a customer credit or overpayment in QuickBooks Online. 

In addition, if you're recording an overpayment for a customer with multiple invoices, the system will automatically check those invoices to apply the overpayment (in the Receive payments screen).

If you want to handle the credit in the future, simply open the Payment transaction and uncheck the invoice you want to leave as unpaid. 

Do you use the Online Banking feature to record and categorize your bank statement with QuickBooks' records? If you need help handling those downloaded transactions, you're more than welcome to use this article as a guide: Categorize and match online bank transactions in QuickBooks Online.

I'm always down to answer any other questions you might have when handling customer payments. If you have any other concerns with QBO, lay down the details below and I'll be around to help.