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Ok, I’ll admit it – I was wrong…

25th Nov 2013
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…about timesheets.

Yes, TIMESHEETS!!!

When I first left practice, like many I breathed a sigh of relief – “ahhh, no more timesheets”.

When I started back in practice (working for myself) I had no intention whatsoever to start doing them again.

Why should I? Initially I thought it irrelevant – I have so much time I need to fill it with clients.

This then became “I know how much I want to earn so I can use that as a gauge for pricing”.

As a general rule this may be ok, but most clients and the work you do for them doesn’t fit into nice standard sized boxes – Category A, B or C, or even gold, silver and bronze. Plus, I'm not going down the VP route, so really my charges need to relate to the amount of time I spend working on a particular client.

Now don’t get me wrong, I’ve no intention of billing by the hour – fixed fees will be standard (there will always be exceptions though).

This general rule though doesn’t allow you to increase efficiency, deliver the service you want to or make the amount of money you want to and work a specific number of hours.

So, after speaking to an AWeb member at the recent social and having a long telephone chat with another I started to see that I might have been a bit hasty.

So, two weeks ago I started to track my time, to allocate it between clients and to record admin accurately.

My initial findings two weeks in are:

1.       It’s a lot easier than I thought it would be.

2.       My recovery rate per hour is higher than I thought.

3.       I don’t work as many hours as I thought I did - I can explain this though;-) 

4.       I know which client’s I’m not charging enough to – so they will be getting a fee increase or will be moved on.

5.       I have a far better idea of how much I should be earning for the number of hours I’m working.

6.       I’m far more focused on work now and waste much less time sodding about (internet etc) and can achieve a lot more in the working day.

So, overall no nasty surprises – I knew which clients fitting into point 4 and that’s been confirmed now.

For those of you who have been in practice for yourselves for a long time, by that I mean 4+ years you probably already know the answers to points 1-5. For those who are fairly new to running your own practice you may want to give it a go, you could be pleasantly surprised (or shocked to the core!).

I’m really glad I did it and will continue to do so.

Anyway 30mins admin time drafting this post is long enough – got to get back to it to hit my 70% chargeable time target with an 8 hour working day*.

* -   will be more this week as I’ve got a few urgent jobs which have just arrived.

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Replies (28)

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By ShirleyM
25th Nov 2013 11:56

Welcome to the 'timesheets gang'

A good 95% of our work is on fixed fees, but we complete 'job sheets', rather than time sheets. It doesn't take up any time at all if you have good systems in place, and gives so much more information about the efficiency of our practice, and highlights any problem areas.

Each to our own, but I like to have that information, and it has come in very handy at times.

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By Sheepy306
25th Nov 2013 12:07

Reluctantly agree

I agree, much to my dismay! I really haven't done a timesheet since I left employment 3 years ago, and I used to despise doing them, the firm I used to work for had a high charge-out rate and therefore a low recovery rate, time would just be written off as fixed fees were always used. However......I take on a lot of 'special' work, business valuations, forensic reports, due diligence, solicitors etc and on that basis I have decided to start recording time just for those jobs, however I suspect I may well extend that to all of my general practice work as I've found it quite useful and really not that much of a chore. Perhaps it's the motivation to do it now that I've got my own practice compared to being told to do it for someone else's firm! Maybe I was just too rebellious. I'm using FourFourTime at present as it seemed a simple and cheap program that I could use immediately, however when I get the time I shall look at other more sophisticated software. What do you use?

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Man of Kent
By Kent accountant
25th Nov 2013 13:04

@Sheepy

Excel - list of clients and dates. Very simple but it works.

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Teignmouth
By Paul Scholes
25th Nov 2013 15:34

Whatever works

As a general observation (and I hope this thread goes to prove it) there are far fewer heated and obsessive discussions these days over this topic than there used to be a few years back (I take my fair share of responsibility).

My problem was always with those who religiously stuck to time recording as the "true way" without ever having tried another approach.

I spent 35 years keeping timesheets, initially for billing then to try & track efficiency, before dropping them 5 & a half years ago and would not go back. So the only spreadsheet I now use is one I draw up at the start of the year that lists all my clients, with their agreed annual fees with a total that indicates whether my costs & reasonable profit are covered.

At the end of the day though, if you try various approaches and arrive at one that works for you and with which you and the clients are happy, then that should be good enough.

My only issue KA is with your observation that clients & work don't fit into standard boxes (true here as well) but then adding "Plus I'm not going down the VP (Value Pricing) route", therefore leaving yourself with only one alternative, to track your time.  Can you say why you exclude VP as, in my business, this reflects the varying nature of the clients & work, and makes time recording unnecessary?

 

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By petersaxton
25th Nov 2013 19:00

Time recording unnecessary?

"Can you say why you exclude VP as, in my business, this reflects the varying nature of the clients & work, and makes time recording unnecessary?"

I'm not convinced that time recording is unnecessary if you use value pricing. As others have said, recording your time has many benefits in understanding the cost of jobs and how you use your time. I've never understood those who say it takes "too long to record time" as I can record time in a matter of seconds or those who say "recording time stresses me" because I experience no stress at all.

Some people may just be slow at recording anything or stressed easily but I would think they are in the extreme minority.

 

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Man of Kent
By Kent accountant
25th Nov 2013 20:56

@Paul

Thanks for your usual thoughtful response.

I suppose I should have expanded on my reference to VP, but then the opening post really would have gone on...

The whole concept of VP doesn't sit comfortably with me, considering the type of services I provide which could be described as general compliance and support.

I base my prices on an estimate of the time I will spend doing the work plus a profit margin. I'm comfortable with this and if my hourly rate used for this sufficiently high and I work to my (perceived) time budget then I'll make a decent return.

I don't want to start pricing based on perceived or actual value.  It can start getting complicated for me to apply and for clients to understand and accept. Plus its been done to death elsewhere and don't want to start the discussion again.

For me, at the moment, recording time is important for the reasons I've mentioned.

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Locutus of Borg
By Locutus
26th Nov 2013 09:59

Arghhh timesheets!
I remember for years as an employee, I was a timesheet slave, desperately trying to work out on Friday afternoon what good clients I could dump my extra time to ... and how much I could get away with charging to 'admin', whilst at the same time hoping to minimise the over runs on the bad clients.

The first thing you do when you become self employed is to dump the bleeding things.

I think I am too scared to re-introduce them. Even though I am now my own boss, I can't bring myself to have the internal discussion of why my recovery rate was so poor on some jobs and so good on others. I find that when working at home, my mind just flits between work and personal internet / TV depending upon how busy / interested I am.

Truth be told, I do still charge by the hour on some assignments, but these are more estimates of what I think I spent rather than an absolute.

12 years of being self employed and I'm still not ready to re-introduce them wholesale.

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Teignmouth
By Paul Scholes
25th Nov 2013 22:05

Peter & KA

Hi Peter - I think the key bit of the text you quote from my post is "in my business" timesheets are now unnecessary, ie all these years without them and still money in the bank and a nice client base.

So I'm not saying they are unnecessary in your or any other business, we've wasted too many hours in that circular argument in the past.

KA - thanks, that makes sense and, as I've said in the past, there's every likelihood that if you and I ran the same client base, you using your methods & me mine, that we would end up making pretty much the same annual fees out of the compliance & support work.

 

 

 

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Man of Kent
By Kent accountant
25th Nov 2013 22:26

Agreed

@Paul - you have the advantage of having done it.

I spent a long time in industry away from practice and I'm still finding my feet two and a half years in.

It may well be in another 2-3 years that I may move away from timesheets and base fees on judgement - which I had been doing up until 2 weeks ago. It may be a lot quicker than this.

As you say it's what works for individuals. For me the main thing is to be comfortable and happy in what I'm doing and earning a decent amount.

What the exercise is showing me is that I can earn more doing what I do than what I had previously thought. Price work properly - competitively and not pricing low just to get the work and work efficiently.

Right now I'm prepping for an accounts job which I'll start properly in the morning. I know the key areas, I already have several queries for the client.

Provided I have no interruptions I'll have draft accounts ready just after lunch. I'll phone the client to discuss queries and will then finalise accounts for client approval in the evening (after taking the two youngest to football practice).

I'll record the time accurately and up the fee for next year if necessary after discussing it with the client.

 

 

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By morgani
25th Nov 2013 22:50

Ditched them and back again
I like most others ditched time sheets when I became self-employed. Recently with the prospect of taking on staff we decided we needed a method of not only recording how that staff member was performing but now how jobs were performing overall. We therefore now just record time for jobs and not admin tasks.
We don't use this for billing as we use fixed fees but we do use it for price adjustments for clients in the future and for setting our 'menu prices' for new clients in the future. We also use it to review types of work such as contractors or various industries so we know the pricing levels for these in the future.

They do have their value after all.

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By User deleted
25th Nov 2013 23:25

I know I waste time ...

... I know I don't work efficiently. I don't keep time sheets as I don't want to see how inefficient I am as all it will do is stress me because it won't change anything, unlike KA I will not suddenly find a focus and work 7.5 billable hours out of 8, in fact I will probably get less efficient as I will sit there fretting about being inefficient!

If you are like Peter who I think is either working at a constant pace or not working then timesheets would work well. I could do the same job and it could take 1/2 an hour, 3 hours or a whole day depending on my mood, what else was on my mind or going on in my life etc. so having a time sheet would be no earthly use to me.

When working at home I will likely as not have the tv or radio on, that slows my work as I stop to watch or listen to bits so any time record is not accurate. I might suddenly get inspiration for a poem and start writing that, or get the urge to play a few tunes on my guitar - I just go with the flow, I really can't be bothered with noting down the change between working and not, I just flow between things. They'll get done one way or another, I don't care how long. My main criteria for ditching clients is more on if I like them and enjoy the work rather than the profitability - there are some I do that are way under priced, but I know that, I do them because I enjoy them. I wouldn't look at a timesheet as interesting though they may be they will not change how I work, or what I work on.

As I say, my working methods ain't gonna change now. After 30 years in the job I know what a fee should be for a job, if I choose to work quick and do it in double quick time, or amble along and take twice as long as I should is my choice and a bit of paper telling me I've done well or wasted half a day is like a broken pencil ...

 As Morgani says, if you have staff they are probably a useful tool, but that is not going to happen here. If you are doing book-keeping that is a different thing, but I do little of that, and what I do is all minor stuff.

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By petersaxton
26th Nov 2013 05:54

Discipline

I think time spent on a job is always useful to know. 

It doesn't matter how you dress up the reasons for not recording time spent on a job:

I'm doing ok without it,

I remember when I fiddled time,

I'm not pricing based on time so why do I need to record time?, 

I flit around too much or

It's my business and it doesn't matter how logical it is I'm just not going to do it.

I always think what it would be like with a client. The client makes lots of profits on some jobs and makes big losses on other jobs. Do you say to the client that you are making enough so it doesn't matter or do you say that if you record details of your time/costs and allocate them between clients then you will know where you are doing it right and where you are doing it wrong. You will know which jobs that are unprofitable or which you need to change your pricing to reflect the time/costs of the jobs. What if the client said: "All the jobs are profitable and I am happy with my time/costs so there's nothing to worry about in MY business - it's only other businesses that may need to worry about that." I would think that the client is trying to keep a record of time in their head (why? when it's more efficient to record), deluded (let them get on with it - but don't take advice from them!) or doesn't care (let them get on with it - they may make £100k but they could make £150k without a lot of effort).

People may have had traumatic incidents with timesheets in the past but there is no LOGICAL reason to not know how long jobs take and recording time is more sensible than keeping it in your head. If there were no compliance reasons for keeping accounts would you advise businesses to not keep accounts?

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By User deleted
26th Nov 2013 07:25

Good for avoiding procrastination

I use VT and when I'm working with the timer on I find that I'm less likely to let my mind wander because I'll feel guilty about it. If the timer isn't on I'll be off in la-la land for a long (but pleasant and inwardly rewarding) time... 

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By User deleted
26th Nov 2013 09:19

Not saying they are wrong ...

... but for me they are pointless.

There are many, especially sole "trades", for whom accounts are purely for compliance, and occassionally for mortgage purposes.

They have no interest in them, they just sign the bottom where indicated.

That said, most could probably tell you the bottom line with 98% accuracy before you started!

For me, I am a person, not a machine, as I said previously the same job could take three different times depending on mood.

For me, what I would be recording is too fluid to have any meaning.

Liken it to vehicles, If each were travellling at a constant 30mph, they would each take 10 minutes to travel 5 miles, but the moped may take one person, the car 4 and the bus 40. Depending on mood I may be a moped, a car or a bus.

But, some days I may be a racing car with the pedal full down and do the trip in 2 minutes, other days I may be a mobility scooter and take an hour!

If they work for you, fine but each to their own. I am happy with how I work without them, it is not ill discipline, it is conscious choice and no bodies business but mine. A time sheet cannot not change the time spent and will not change the price I charge and does not affect the way I work - profit it not my God,enjoying my life is and as long as my fixed costs are covered, which they are more than adequately, then I have achieved my goal - I have no interest in squeezing every possible pound out of my clients. May be I am lucky, but my job is not just my work, it is my play too!

There are two sides to every coin, I just wish every one would realise that. In MY business every job is profitable, where I don't do the job myself the sub-contractor gets a fixed percentage. Some don't make as much per hour as others, but they still all make a profit, well except the one job I do for a case of wine, but then it keeps the wife happy for a week or too so I suppose that is a profit!

That said, I know most of my jobs would be overpriced if charged on a timesheet basis, If I start a company's accounts in the morning and it is in an envelope with a bill for £700 by lunchtime a timesheet isn't really going to tell me much I don't already know!

Anyway, enough said, I'm getting brick marks on my forehead.

 

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Man of Kent
By Kent accountant
26th Nov 2013 10:17

93% chargeable time!?

@OGA - I wish ;) I'll be happy with 70%.

Yes, it won't work for everyone and as your business is well established and providing you with the lifestyle, income and enjoyment you need - why change?

For me its given me an incentive to work better (efficiently) which means I feel better and can spend more time doing other things.

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By ChrisScullard
26th Nov 2013 21:42

Oddly enough I've just started doing the same exercise as KA - mainly because now being two years into my practice and seemingly working every hour god sends, I don't seem to making nearly as much as I think I should for the number of clients I have and the effort I put in.

I also only charge fixed fees (unless there is a very good reason not to), with these being based on a menu pricing system which is loosely based on a cost per hour (i.e.: bookkeeping is £x per hour, VAT returns are £y, year end accounts £z, etc).

By looking at each client and everything I do for them over the year, and estimating how long each task should take, I can estimate my average hourly recovery.  I know what this needs to be based on doing 30 hours chargeable time per week to get the income I want/need.

It has highlighted a few interesting things.  Some clients don't pay enough for a start (a hangover from my earliest days when I priced things far too cheaply for a variety of reasons; mainly naivety).  Also I don't do nearly as much client work as I thought I did.  I've established I spend far too much time doing things I don't need to, dealing with queries I won't get paid for and generally p*ssing around.  I'm probably not as efficient as I could be with technology, etc either.

It's also confirmed I'm doing certain things right, and given me definitive new business targets to get to where I need to be.  Most importantly it's given me a very valuable KPI going forward.

As it happens 1 Dec is the start of my new financial year so from that date time recording is starting in earnest!!

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Glenn Martin
By Glenn Martin
26th Nov 2013 22:55

A good topic.
I used to hate filling time sheets in when I was training and was delighted when I left for industry that I would t need to do it again. However since returning to practice I find I keep a basic record track spent on each job. I have most clients on fixed fees but do a quick basic calculation to see what the recovery rate was for the job and see if the fee is sufficient for work involved. I won't necessarily put the fee up but maybe back heal some work back to the client. I tell you what I have noticed is how much time the practice admin takes, issuing quotes, sending LOE, marketing and doing AML checks and other non productive work. I defo need some help to do that side of things.

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Teignmouth
By Paul Scholes
26th Nov 2013 23:04

Chris

I'm sure your experience rings bells with lots of practitioners, it certainly reminds me of some really stressful and frantic times in my career.

What I discovered was that I had too many clients, or rather, I was dealing with a chunk of clients and work who/that, with hindsight, I shouldn't have taken on or retained.

Chasing your tail, fire fighting and gradually getting to resent the stress and "working all hours" does not provide a healthy environment for working efficiency, practice management or planning, in particular, if you are worried about never having enough time to cover the basics and keep clients happy, then you will see management & planning as unjustifiable, whereas they deserve to come first much of the time.

So, whether I kept timesheets or not, the solution was obvious, reduce the poor quality clients & work, giving myself more time to concentrate on the quality clients & work, manage the business and have breakfast & evening meals with the family.

As OGA indicates, I too found that time sheets, and the often finger in the air rates per hour, were a clumsy way to judge either the fees we charged or calculating the "recovery" on each job, ie you could have two similar accountants living next door to each other, doing similar work for two similar clients with hours x £X ph creating a profit on the job in one firm and a loss in the other.  What's missing to a large extent with time x £s (and I have to say in shopping list fixed fees) is the client.

Using Peter's reasoning of comparing methods we use to those used by clients, probably 98% of the businesses in this country base their charges and sale prices, wholly or significantly, on what their customers and markets indicate are OK, why should we be any different?

 

 

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By petersaxton
27th Nov 2013 08:04

Not different

I'm not saying the market doesn't have an influence. Within certain limits I find clients, if they are happy with your work won't go somewhere else that is cheaper because they are scared of an unknown poor quality.

What is useful about timesheets is more to do with understanding what you spend the time on. You can also use your timesheets to explain why you need to charge for something that shouldn't take so long if it didn't need doing.

I've just had a couple of clients who say they have made sure that the bank transactions were correct but after explaining to them how they can do a bank reconciliation I have still found that when I check their work they then admit they haven't done it and just thought it was correct. This has meant I've had to do a lot of extra work and with my time records I can justify the extra charge. I've tried to save charging clients by passing the work back to the client after reminding them how to do it but even though they say it's right when I check it again it's not right and I can correct it quicker myself than spending days passing data backwards and forwards.

I'm going to make a big effort to get clients using online bookkeeping from 01/04/14 but I know it wont be easy.

 

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Replying to Heidi Roffe:
Red Leader
By Red Leader
27th Nov 2013 11:14

some thoughts

I've been in practice for myself for over 10 years and have kept timesheets all that time. My only previous experience with timesheets was many years earlier in a big 8 firm (remember them?), pre-software days, when I would daily note down rough amounts of time for each client in a diary. Then once a fortnight I would try to cobble together a timesheet to hand in that added up to 35 hours per week.

The mechanics of recording time is very different now. Like KA, it's just a simple spreadsheet that makes it really quick and easy using the NOW function.

Most of us work on fixed fees, so the counter-argument of timesheets=charging by the hour is a fallacy.

To respond to a point above, I'm always struck by practitioners looking to make less doing bookkeeping work than say tax return work. If you can earn £100 per hour doing tax returns, why bother with £40 per hour doing bookkeeping? Or am I missing something?

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Man of Kent
By Kent accountant
27th Nov 2013 12:29

Bookkeeping

I suppose the trick is to provide bookkeeping as part of the services (accounts, corp tax, SATR) and price the whole package so that you can make £100 per hour - or whatever your desired rate is.

Saying that, I do have one client where I do bookkeeping and vat returns only and I achieve one of my highest hourly rates on this client's work.

 

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Man of Kent
By Kent accountant
27th Nov 2013 12:33

@Peter

You could offer to pay the monthly subscription in the knowledge that it will take you less time to do the work, therefore increasing your hourly rate of return.

So something for free - clients usually like that.

Mind you those not recording time may view this as throwing money away ;) 

 

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Teignmouth
By Paul Scholes
27th Nov 2013 13:08

Bookkeeping

Ditto to KA's comments, all our bookkeeping work, whether 100% for one client or 5-20% the rest, is wrapped up in an annual charge and we only do the 100% one because they are 3-4 hours a quarter and the client is not interested in learning it.  If I was billing for this work alone it would probably come out at £80 ph.

More importantly though, these days, is that with more & more businesses able to do everything themselves, ie without using an accountant or bookkeeper, if we want to attract them in the first place, providing a bookkeeping facility (especially Cloud) may be the only way to attract them.

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By petersaxton
27th Nov 2013 15:23

agree with Paul!

That is the main point. If you don't do the bookkeeping you may not get the client. I turned a lot of work away because I didnt want to do the bookkeeping. If I can do the bookkeeping online and mix it with introducing the client to doing what they can it may be the best way. I agree that mixing bookkeeping, year end accounts and tax together you can quote one fee for the lot.

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By chatman
12th Dec 2013 18:10

Would love to record time but cannot.

I would love to be able to record my time, but I always seem to be working on so many things simultaneously that it is impossible. I don't know how the people who do it manage it.

I once tried www.Chrometa.com, which does capture absolutely all time spent, but the reports are useless.

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By petersaxton
12th Dec 2013 18:32

Chatman Octopus!

I don't know how you work on many things simultaneously!

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Replying to Lone_Wolf:
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By chatman
12th Dec 2013 18:48

Zero-tasking

petersaxton wrote:
I don't know how you work on many things simultaneously!

I suspect my definition of the word "work" might not be so rigorous as others'.

Seriously, though, what I mean is I am working on one thing and I go to send an email about it but then I notice another email has come in, so I start reading it. Then maybe I will reply to this new email, or start looking into whatever it is I need to look into to answer it. Then one thing leads to another....

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Replying to Ruddles:
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By User deleted
12th Dec 2013 23:09

Ah Chatman ...

chatman wrote:

petersaxton wrote:
I don't know how you work on many things simultaneously!

I suspect my definition of the word "work" might not be so rigorous as others'.

Seriously, though, what I mean is I am working on one thing and I go to send an email about it but then I notice another email has come in, so I start reading it. Then maybe I will reply to this new email, or start looking into whatever it is I need to look into to answer it. Then one thing leads to another....

.

.. a butterfly soul-mate indeed :o)

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