Tree service CFO: crew-day economics, equipment cycles and storm cash

The crew-day is the unit everything else hangs on

A tree company sells crew-days, whatever the quote says. The fully loaded cost of one — wages with CPP, EI, Employer Health Tax, vacation pay and WSIB on top, fuel, chip and log disposal, insurance, and the hourly cost of the truck, chipper and saws that ride along — is the number every price, bid and hiring decision should start from. Most owners have a feel for it and are off by enough to matter.

We build it per crew type, because a two-person climbing crew, a three-person bucket crew and a crane day cost very different amounts to put on the road. Then we compare each crew's billed revenue per day against its cost, week by week. That one ratio tells you which crew is carrying the company, which estimator is underpricing, and how many crew-days of backlog you are really holding.

Pricing removals, pruning and the municipal tender

Residential quotes are judgment calls on diameter, access, rigging and whether a crane is cheaper than a day of climbing. The judgment improves when the estimator's price sheet is built from real crew-day cost with a target margin, and when close rates are tracked by estimator and job type, so the sheet gets corrected instead of argued about.

Municipal and utility tenders are different: unit rates by diameter class, hourly rates for a bucket truck with crew, multi-year terms, sometimes with no escalation clause. Winning one at the wrong rate locks in years of losses. We model each bid against crew-day cost and expected productivity per unit, and we stress the number for a wage settlement or a WSIB rate change before it goes in the envelope. Plant health care — emerald ash borer injections, fertilization, cabling and inspection programs — is the recurring revenue that smooths a removal-heavy year, and we track it as its own line so its margin stays visible.

Storm surge: the cash comes later than the work

A derecho or an ice storm produces the best month in a company's history on paper and the worst cash squeeze in practice. Overtime is paid on Friday. Crane subcontractors invoice on short terms. Fuel and damaged gear go on the card. Insurance-funded removals settle weeks or months later, and the regular pruning pipeline gets pushed back, so the month after the storm is thin. The May 2022 derecho and the December 2013 ice storm both followed that pattern for Ontario tree companies.

The tool is a 13-week cash flow forecast that treats storm revenue as a receivable with a realistic collection lag, not as cash. We also set a storm reserve rule: a share of surge margin goes to equipment replacement and tax instalments before anyone shops for a third bucket truck. Our note on cash flow for seasonal businesses covers the wider seasonal pattern.

Equipment: replacement cycles, utilization and lease versus buy

The fleet decision most owners agonize over is the grapple saw truck or the second bucket truck; the one that actually costs them is the chipper that has been nursed two years past its economic life. We run a cost per operating hour for each major unit from hour-meter readings, maintenance spend and downtime, and a replacement schedule funded from the reserve rather than from whichever season happens to be good.

Whether to buy, finance or lease depends on utilization more than on tax. A crane used forty days a year is a rental; a chipper used two hundred days is an asset. Our lease-or-buy answer sets out the framework, and we apply it unit by unit, coordinating purchase timing with the tax side so CCA and cash line up.

What the monthly CFO package looks like

Each month you get the dashboard above, a margin view by service line, the rolling 13-week cash forecast, and a short list of decisions: a price sheet adjustment, a hire, a unit to retire, a bid to walk away from. When a decision touches the border — a US auction purchase, a US storm subcontract — our cross-border tax page for tree services covers the tax side and we price it into the model. The advisory and CFO services page explains how fractional CFO engagements are scoped and quoted.