What Is a Prox Term?
Prox terms define a specific day of the month as the net due date and optional discount due date. Use prox terms to establish a net due date for all invoices generated during a defined period. For example, paying all invoices due on or prior to the 25th of the month.
Prox is a term that comes out of the retail industry and means "next of month." Invoices that did not meet the designated "cutoff" date for one month, would be paid in the next month. This is similar to the rationale credit card companies use to produce billings; your monthly bill includes charges up to a specified cutoff date. All charges made after that date are put on the following month's bill.
Example
The following example illustrates prox term near the cutoff day. Assume the following information about the sample invoice.
| Invoice Date | January 16 |
| Invoice Cutoff Date | 16 |
| Invoice Amount | 100.00 |
| Prox Day | 15 |
| Discount Percent | 5.0% |
| Net Due Date | 25 |
You would see the following results.
|
Discount Date |
Discount Percent |
Discount Amount |
Due Date |
Amount Due |
|---|---|---|---|---|
| February 15 | 5.0% | 5.00 | February 25 | 100.00 |
If the invoice was a day later, January 17, you would see the following differences:
-
The discount date would be March 15
-
The due date would be March 25
What Is the Difference Between Prox and Split Terms?
You can define specific days of the month as the net due date and optional discount dates with both split and prox terms. Split terms have the added ability to split a month into five segments, each having a unique net due date and discount date.
The key difference is the number of due dates during the month. Prox terms are useful if you want to limit the number of due dates to one per month. Split terms are useful if you want to have more than one net due date each month.