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IOU is a common shorthand for "I owe you," which has been in existence since at least the early 1800s. The abbreviation IOU is usually followed by an amount of money, an item, or a service (i.e., the thing owed).
An IOU is a document that acknowledges a debt owed. In business, accounts receivable may be informally called IOUs. An IOU between two people conducting business may be followed up with a more formal written agreement.
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, or “I Owe You”, is used by someone borrowing money (the “borrower”) to officially document that they owe someone (the “lender”) a debt. While an IOU is less formal than a promissory note, it is still a legally binding document that can be used in court, if necessary.