The simple explanation is that this fund represents an amount of money that you will keep in your company so all employees can use it for various small spending. For example, new need more paper for the printing machine, food, beverages, office equipment, and more.
The advantage is that you will avoid regular process that require ordering and paying with official account.
You don’t need any proof when you are spending this money. In most cases, these are small amounts. Keep in mind that it can be very convenient to keep at least a $100 in your office. For example, you have to send formal letter so some of your clients, but you don’t have any at the moment. Some of your workers can simply use this money and buy them.
It is always advisable to keep some money available in the office. Petty cash management is often forgotten by many businesses, and the mistake is that people start thinking about it once they start experiencing obstacles that require small payments.
When it comes to the right amount, it depends on the size of the company and the potential expenses it can experience. There is also a relation with your clients. For example, if you are welcoming them to your office, it is a good idea to offer them some beverage or snacks. There are services where you can rent a machine for that, but this will provide you with a higher flexibility.
Also, it will be much easier for your workers to deal with various daily tasks. Imagine a situation where the cable is broken so one of your workers cannot use the PC. Calling service is a regular option where you can pay by using the official account.
However, it is a much easier solution to let the person go to the nearest store and buy the new cable so it can continue with work. Even though it can be more expensive, the difference for a cable, office equipment, and many other things will not be significant for the financial stability of the company.
The most important thing about this fund is to create a transparent system where you can check where the money was spent. That will prevent people from buying random things with it. The best option is to create an account where people will have to deliver bills so they can prove the amount of money they used.
The key is to prevent bigger issues that can be caused by some inexpensive things like the lack of paper in the printing machine, toner, and other random things that can be easily forgotten. Also, set the amount of money you want to have, and be sure to keep it that way all the time. For instance, if that is $400, check the amount daily so you can be sure that the same sum is on the balance all the time.
In the end, acknowledge the people working in your company that these funds are only for unexpected obstacles.