How do I deal with overpayments on Xero?

You will have to find and match the bill or invoice that was overpaid, then allocate the overpayment under a new transaction.

Xero Central has a good article on this which shows you how to resolve the issue. 

If you're a RightWay customer and still require help with this issue we're happy to chat you through it. Please contact your RightWay accountant, email info@rightway.co.nz or call 0800 555 024