Why am I getting a currency (gain) loss?

I paid one invoice that is invoiced in US Dollars, so I thought that I would have that supplier default to US Dollars. I put the invoice in for the Dollar amount and on the spend money I paid the British Pound Sterling amount. All seemed to work well as invoice is marked as paid.

However, I noticed that I have an £85.42 loss in currency gains, which is not possible over the space of 1 week. The exchange rate has not altered that much.

I wonder if this is because I did not put in a currency exchange rate in settings? All I did was put the dollar amount on the invoice and the pound amount on spend money.

However, what puzzles me is what use in accounting this gain/loss is. I don’t think that I can claim it as an expense as I have not lost any money - that is just what the exchange rate was on that particular day. Not withstanding the fact that the amount is obviously wrong.

Now that I look at it, the amount that I paid is £897.57 but according to the expense account, its showing an amount of £812.15. The difference between the two amounts is still not £84.42. I am obviously doing something wrong!

The reason is that you didn’t enter any currency exchange rates under Settings tab.

Manager has hard-coded exchange rates just to give you at least something even if no exchange rates have been entered.

Enter exchange rates under Settings tab as at when the USD invoice was issued. Then look at the calculations again. You will see a lot lower loss/gain.

I have added the exchange rate and backdated the date to before the payment. The currency gain/loss is now at zero and the amount in the expense account is now correct. I did not realise that I had to set the exchange rate as I manually put the amounts in. Its working now. I will remember that.