In today's agricultural economy, maximizing cash is critical. That’s why Farm Credit Illinois and our funding bank, AgriBank, FCB, have teamed up to introduce an integrated program to help farmers and agribusinesses manage cash and minimize net interest cost. It’s called Farm Cash Management, and it's only available to Farm Credit Illinois members.
The Farm Cash Management program combines the availability of a revolving line of credit with the high return of a short-term investment account. The program saves you money by putting your funds to work where they generate the best return. Returns are far superior to the investment option of a low interest savings account.
Here's How It Works
When you have cash available, your operating loan is paid first and excess funds are then invested in an account comprised of AgriBank investment bonds. These bonds pay interest at rates that are significantly higher than what can be earned on typical commercial bank accounts – like checking, savings, money markets and certificates of deposit (CDs). When you need cash for operating expenses, the investment account funds are used first, before advancing funds on your operating loan, helping to minimize your operating loan interest cost.
Funds are immediately available by writing a draft on your revolving line of credit, unlike having to transfer your funds from a savings or investment account to a checking account to be disbursed. Funds also can be transferred via the Internet or by phone. Unlike some investments that require funds be locked in for a certain period and assess a penalty for early withdrawal, Farm Cash Management investment funds are liquid and available at any time.
Unlike most negotiable order of withdrawal (NOW) accounts or money market accounts, Farm Cash Management has no limits on the number of drafts that can be written or the number of electronic funds transfers that can be made. And there are no monthly or per check fees like you will find with most of these other accounts.
Interest earned on AgriBank investment bonds is exempt from state and local income tax, so the tax-adjusted annual yield is even higher.
Ease of Use
Using Farm Cash Management is as simple as making a loan payment or writing a draft on your operating loan. Access funds, make payments, and check your balance using your myFCI online account. Contact your local FCI office to get started.