I'm not sure if you ever figured this out, it was from 3 years ago lol.  I was having the same issue as you and this came up on google search.  I found that you need to enter it as a vendor credit.  Then you have to go to the actual vendor in the vendor center and write their check from there instead of going to the pay bill option.  At that point you'll see their open bills and open vendor credit on the right side.  Pick what you want and it works perfectly!  Hopefully you figured it out before I did !