Investor's wiki

IOU

IOU

The abbreviation IOU means "I owe you" and alludes to a casual document that recognizes a debt one party owes to another. The debt typically includes a monetary value however can likewise be connected with different goods, like physical products or properties.
Inferable from the casual quality of IOU, they will generally carry a certain degree of uncertainty and, in contrast to bonds and promissory notes, are not viewed as a legal negotiable instrument. This means that the party in debt has no legal obligation to really pay the debt just on the grounds that they recorded on paper and marked an IOU.
IOUs can be essentially as simple as a piece of paper or even a verbal deal between individuals from a similar family. At times, businesses may likewise involve IOUs as a method for casually recording the amount they owe to another company or to their employees, for instance.
Generally, IOUs are just easygoing notes that individuals make to remind they need to pay a debt in a future date. In some cases they incorporate the gatherings names (or companies names), the value, the signature, and the date they were made. In any case, as casual documents, IOUs incorporate no data about the outcomes of not paying or the specific dates that it ought to be paid.

Features

  • An IOU is a written affirmation of debt that one party owes another.
  • The casualness of the IOU can make it challenging to authorize, and generally difficult to sell or trade.
  • In business transactions, an IOU might be trailed by a more formal written contract.
  • IOUs are less formal and legally binding than promissory notes.
  • The term IOU is additionally utilized in bookkeeping to allude to accounts receivable.