Trust works both ways. As a contractor, I have to go "way" out on a limb to trust you. Trust you to pay me, trust you to pay on time (I'm not a large vendor with multiple accounts to fall back on for cash flow), trust you to make decisions and supply content/assets on schedule, trust that you won't end up crazy and hard to work with, etc., etc.
If you can't trust me, why should I trust you?
That said, it's very easy. If the work gets done and as expected, you did well.
There are plenty of time tracking programs. Most have an interface where the worker stops and starts a timer, which creates data that feeds into time sheets. I’ve personally used TopTracker from TopTal.
While it may appear to be the obvious and "safe" thing to do because it seems measurable - and because "everybody" does it - it's measuring the wrong thing entirely.
Neither the client nor the contractor are actually interested in time wasted but that's essentially what you get if you bill by the time that went into creating some sort of output.
With time-based billing the contractor has the perverse incentive to spend more time, rather than becoming better and more efficient at what she does (which in turn would benefit the client as well because becoming better means being able to deliver higher quality work in less time).
The client on the other hand has an equally perverse incentive to reduce the hours that go into achieving a result, rather than putting emphasis on the agreed upon outcome.
Therefore I suggest to stop obsessing about time or trying to verify timesheets and rather focus on the outcome:
What's the desired outcome?
What's that outcome worth to the client? What value does that outcome create?
Can the contractor put a price tag on that outcome at which there's both a net benefit to the client and profit for the contractor?
Admittedly, that's much easier said than done, which is why many contractors and client still fall back to the "safe" default of billing by the hour. In that case, both parties involved usually rely on experience, trust and business ethics. You can't build a sustainable business by fleecing or cheating your clients and you can't build a successful client-supplier relationship on distrust either.
Still, in order to become better at measuring outcomes rather than time wasted we need to start thinking in terms of outcomes in the first place.
Hourly billing isn’t an issue, poor governance is. Few contractors will actively try to feather their beds, as their reputation will suffer.
Lets say you want a pizza, and contact your favorite pizza place for it. Does it matter how long it took to make ? Or does it matter that you get a good pizza in a timely fashion? Would you be offended if the pizza came faster than it should?
If this holds true for a pizza, why would it not hold true for any other service/good ?
It's basically based on trust just like with regular employees. If you are not performing well, your contract probably won't be extended. Plus as a contractor you can just be let go with a week of notice.
For instance if you work closely with people, then you definitely get a feeling for their productivity. If you’re not technical, you don’t have access to the source code repository. If you don’t have your own office, you can’t check people coming in on camera. That sort of stuff.
Usually I’ve used timesheets with an assigned supervisor signing off on the time worked within a week. If there are performance problems, you can audit the timesheets. The biggest problem that I’ve run into in 20 years travel expenses, and as a result I always push to incorporate those expenses in the rate.
I’ve known people who have required contractors to track time in 6 minute increments.
If I were king, I would prefer day rates to avoid silly conflicts. Alas, I am not.
You want to develop a transparent relationship. Our job is complex enough to waste time on being micromanaged and surveilled.