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An IOU is a document recording a debt and an informal agreement typically to pay someone, though it can be to do something. Without memorializing the debt in a more formal written contract, the IOU is not clearly legally binding, and thus more difficult to enforce.

Usually, an IOU is a signed informal notice of an unpaid debt, sometimes because of partial payment and an outstanding balance due. For example, Company XYZ may buy raw materials for its production but until it sells the finished product, it does not have sufficient cash flow to pay for the raw materials in full.

An IOU is a written acknowledgement of debt that one party owes another. In business transactions, an IOU may be followed by a more formal written contract.The term IOU is also used in bookkeeping to refer to accounts receivable. IOUs are less formal and legally binding than promissory notes.

However, to say that a written IOU has no legal value is incorrect.But if someone you cannot or do not want to refuse needs a loan at a time or place when you can get no lawyer, note or collateral, a signed IOU is enforceable written evidence of a debt.

An IOU is a document that acknowledges a debt owed. In business, accounts receivable may be informally called IOUs. The term IOU has a history dating at least to the 18th century and is often viewed as an informal written agreement rather than a legally-binding commitment.

A promissory note includes a specific promise to pay, and the steps required to do so (like the repayment schedule), while an IOU merely acknowledges that a debt exists, and the amount one party owes another.

An IOU is a document recording a debt and an informal agreement typically to pay someone, though it can be to do something. Without memorializing the debt in a more formal written contract, the IOU is not clearly legally binding, and thus more difficult to enforce.