Prox terms are not well understood, but can be explained quickly. Prox means next. For example, you might see terms of 20th Prox. It means the invoice billed in one month will be due on the 20th of the following month. In other words, the next 20th of the month. So, all invoices generated in January are due February 20th.
What about Prox terms with a cutoff such as Net 20th Prox with a 15th cutoff? This means that all invoices in a given month invoiced by the 15th are due the 20th of the following month. Anything invoiced after the 15th would be due not in the following month, but the month after that.
Example: An invoice dated January 14th would be due February 20th. An invoice generated on January 16st would be due March 20th.
© 2011. Michael C. Dennis. All Rights Reserved. Michael is the author of "Credit and Collection Handbook."