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Essentials of an IOUName of the debtor.Name of the creditor.Amount of money in question (written out in both words and numbers).When the debt will be repaid.If interest is to be charged until the debt is repaid, the details of how the interest is calculated should be spelled out.Signatures of both parties.More items...

An IOU is a written promise that you will pay back some money that you have borrowed. IOU is an abbreviation for 'I owe you'.

An IOU, a phonetic acronym of the words "I owe you," is a document that acknowledges the existence of a debt. An IOU is often viewed as an informal written agreement rather than a legally binding commitment.

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.

Cash equivalents include all undeposited negotiable instruments (such as checks), bank drafts, money orders and certain certificates of deposit. IOUs and notes receivable are not included in cash.

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.

As documentary evidence of a debt, a signed IOU is as good as any promissory note.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.